Credit: Shutterstock photoStaples is showing signs of a reversal, and one investor is apparently calling a top.
optionMONSTER's tracking systems detected the sale of more than 9,400 March 24 calls for $0.55. Volume was almost 10 times open interest in the strike.
SPLS fell 0.18 percent to $22.84 in afternoon trading. It hit an seven-month high of $23.06 shortly after the open but then reversed lower. Some chart watchers may consider that a sign the office-supply chain has run out of gas.
The stock has rallied along with other retailers, appreciating 29 percent since the beginning of September. The gains came despite weak sales growth, which has forced management to rely on cost cuts to hit its numbers.
Its last earnings report on Nov. 18 showed revenue inching higher by just 0.3 percent. Results were also hurt by an ill-timed expansion into the Eurozone.
Today's call seller is expressing a belief that SPLS will remain below about $24.55 through expiration, a level the stock hasn't seen since April. The trade may have been the work of a shareholder looking to earn income on a long position in the stock, or of a bear expecting a pullback.
Overall option activity in the stock is 50 times greater than average today, noteworthy that its share volume is barely one-quarter the usual amount.
(Chart courtesy of tradeMONSTER)
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
