A large trader apparently thinks that Gap is headed back near its all-time highs from more than a decade ago.
optionMONSTER's Heat Seeker monitoring system detected the purchase of some 5,100 September 45 calls for $2.19 and the sale of a similar number of September 50 calls for $0.47. Volume was more than 9 times the previous interest in each strike, indicating that both positions were opened.
The trade cost $1.72 and will earn a maximum profit of 190 percent if the retailer closes at or above $50 on expiration. (See our Education section for more on the strategy, known as a bullish call spread .)
GPS rose 1.5 percent to $44.76 yesterday, and is up 44 percent so far this year. The shares are now back at their highest levels since 2000, when they touched $53.75. The stock then rolled over and tumbled into the single digits by late 2002.
There are multiple events before expiration that could serve as catalysts: July same-store sales will be reported on Aug. 8 and second-quarter earnings follow on Aug. 22. August same-store sales also come out in early September.
Overall option volume was 12 times greater than average in the session, according to the Heat Seeker. Calls accounted for more than three-quarters of the total.
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