Foot Locker receives bullish trade-11/04/2009

Foot Locker has taken a beating along with the rest of the market recently, but one trader is positioning for a long-term rally.

optionMONSTER's tracking systems detected the purchase of 3,500 January 2011 12.50 calls for $1.10 and the sale of an equal number of January 2011 7.50 puts for $1.10. The transaction resulted in neither a credit nor a debit, and volume was more than 18 times open interest in both strikes.

FL rose 1.77 percent to $10.36 yesterday. The shoe retailer had been consolidating around the $12 level until getting driven lower in the last two weeks along with the rest of the market. Yesterday's options trade occurred after the shares bounced from a two-month low of $9.93.

The strategy is designed to leverage the stock moving higher over the next 15 months. It will make money if FL closes above $12.50 by January 2011, lose money below $7.50, and nothing in between.

FL's last earnings report was on Aug. 21, when profit and revenue missed estimates. Overall options volume in FL was about three times greater than average yesterday.

(Chart courtesy of tradeMONSTER)

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