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Ralph Lauren bulls looking for rebound

At least one trader apparently thinks that Ralph Lauren is the comeback kid.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,300 April 140 calls, most of which priced for $1.60. Volume surpassed previous open interest of 2,064 contracts, which indicates new money was put to work.

The investor now has the right to buy shares in the apparel stock for $140 through expiration, no matter how high they may be at the time. That will prevent them from missing a rally while limiting the amount of capital at risk if it drops. Given the cheap cost of the long calls , it would take a move of only about 2 percent for them to double their money. (See our Education section)

RL is up 1.27 percent to $139.57 in afternoon trading. The clothing retailer peaked near $190 late last year, slid lower in January, cratered on a poor earnings report in February, and fell all the way under $130 by mid-March. The stock has been working its way higher since and is now pushing back against its 50-day moving average.

The strong dollar weighed on results last quarter, but investors might think that's now less of a problem as the euro and other currencies rebound.

Total option volume in the name is more than triple its daily average so far today, with calls outnumbering puts by a bullish 15-to-1 ratio.

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.


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

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