What's behind large call sale in Ann

By David Russell,

Shutterstock photo

Ann is trying to rebound after gapping lower, but one trader apparently thinks that it's running out of gas.

optionMONSTER's tracking systems detected the sale of more than 6,000 February 24 calls for $0.15. Volume is 14 times open interest in the strike.

The trader is now obligated to sell shares in the women's apparel company for $24 if they end the week above that level. If they don't, he or she will get to keep the credit and the contracts will expire worthless.

ANN is down 0.61 percent to $23.50 in early afternoon trading. It dropped sharply on Feb. 2 after issuing a weak preliminary earnings report and since then has been drifting higher. Based on today's call selling, the investor expects that rebound to peter out.

He or she may be selling the calls against an existing long position or simply be speculating against the stock. The trade seems mainly designed to profit from the contracts losing value into expiration this Friday. (See our Education section)

Overall option volume in the stock is quadruple the daily average so far in the session.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: ANN

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