Right out of the gate yesterday, investors boosted options volume and expressed mixed sentiment on retail stocks the first trading day after June expiration.
Starting off with Abercrombie & Fitch (NYSE: ANF), an investor bought the Nov. 30-35 call spread 5,000 times, and simultaneously sold 5,000 Nov. 17.5 puts; the investor paid 20 cents to do this multi-legged trade. ANF has been under pressure for months due in part to declining sales numbers, and the shares are currently trading down 55 cents to $25.46. It’s interesting to note, however, that at least one investor is expressing bullishness on the clothing retailer. The Nov. 30 calls were home to open interest of 982 contracts, while the Nov. 35 calls were home to open interest of 281 contracts. The Nov. 17.5 puts were home to open interest of 577 contracts. ANF shares have climbed more than 70% since Nov. 20 when the shares dipped to a 52-week low of $14.15. However, they are down from the low 30s reached in early June.
J.C. Penney Company (NYSE: JCP) shares dropped about 67 cents to $25.93 yesterday, but one investor was expressing bullishness on the retailer and sold 5,000 July 22 puts for around 40 cents. JCP stock was trading at $25.81 at the time of this trade. The in-the-money July 22 puts, which were trading down two cents on the day, were home to open interest of 275 contracts. JCP did not announce significant news yesterday, but at least one investor could be betting that the stock has more room to rally. The investor needs JCP shares to expire higher than $21.60 come July expiration to make money - the stock does not necessarily need to rally, it just needs to hold around its current levels. JCP stock has rallied 85% since reaching a 52-week low of $14.18 on March 9.
Looking at the July 29 calls in Coach (NYSE: COH), an investor sold 1,500 of these calls for 45 cents with the stock up 31 cents on the day to $26.55. We also saw call sellers in the July 30 calls, which were trading down five cents. The in-the-money July 30 calls were home to open interest of 1,972 contracts. It’s interesting that COH shares were up on a down market day, but an analyst from Lazard Capital raised his expectation of the company’s new “Poppy” collection because of a boost in media and customer buzz before it launches this Friday. Despite this rally, we saw at least one bearish investor betting that COH shares could drop below $30 in the next month.
We noticed some premium selling in retail stocks yesterday, as investors could be anticipating a pullback in names like COH. Other potentially bullish investors could be betting that stocks like JCP and ANF have downside limits in sight, at least for the next month. ONN.tv has remained bearish on the retail sector, but it’s interesting that some investors are betting that these stocks will not give back some of their gains in the near future.
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