Retail is a major theme in the near term, and traders are looking for a breakout in department-store operator Kohl's.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,000 August 55 calls for $1.80 and the sale of about 4,000 August 52.50 calls for $3.30. Volume was below open interest at the lower strike, which suggests an existing long position was rolled up to the 55s.
Calls lock in the price where investors can buy a stock, which lets them profit from a rally with minimal risk of loss. They can also roll capital from one contract to another to get the most bang for their buck. See our Education section for more on managing trades with options.
KSS rose 0.16 percent to $55.81 in afternoon trading. It's been moving sideways for years, with the $58 area marking the top of its range.
The next potential catalyst is the release of quarterly results on Thursday morning. Attention will probably remain on the entire industry group in coming sessions, with the Commerce Department's retail-sales report due on Wednesday morning. Macy also reports earnings, followed on Thursday by Wal-Mart, Nordstrom and J.C. Penney.
Today's trade in KSS let the investor recover about $960,000. It also reduced their downside risk if the stock falls while keeping them exposed to upside if it blasts through resistance.
Total option volume was triple the daily average, with calls outnumbering puts by almost 5 to 1.
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