Phillips-Van Heusen has been drifting lower for more than two months, and one trader is ready for a drop.
optionMONSTER's Depth Charge tracking system detected a surge of put activity in the name yesterday, which may have been implemented by a speculative bear looking for the apparel stock to drop. It may have also been the work of a shareholder who doesn't want to lose his shirt if a selloff occurs.
Blocks of 2,800 contracts each were bought in the March 60 puts for $2 and sold in the March 60 calls for $2.55 and $2.60. Volume was more than 4 times open interest in both strikes.
Large transactions occurred simultaneously against open interest in the February 60 calls and February 60 puts, suggesting that a collar strategy was rolled from one month to the next. A collar is a surrogate for selling shares, where the investor writes calls and buys puts to simulate a short position. (See our Education section)
PVH fell 1.65 percent to $60.13 yesterday. The stock has lost 16 percent of its value since Dec. 3, when the stock reversed at an all-time high of $72.42. Management raised guidance during that downtrend--which is potentially bearish because, as Guy Adami often says, "when stocks fall on good news, watch out."
PVH also made a lower low in January and a lower high this month, which some chart watchers may consider evidence that more declines are coming. The next earnings release is scheduled for after the bell on March 28.
Overall option volume in the name was 12 times greater than average yesterday, according to the Depth Charge.
(Chart courtesy of tradeMONSTER)
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.