Options Trading News

November 11, 2013  Mon 2:45 AM CT

A call spread is looking for more upside in Urban Outfitters

optionMONSTER systems show that 4,500 of the November 39 calls were bought for their ask price of $0.55. At the same time, 9,000 November 40 calls were sold for the bid price of $0.10. Volume was multiples of previous open interest at each strike, clearly indicating new activity.

This ratio spread cost the trader $0.35, which is the maximum amount at risk if URBN falls below $39. The maximum gain would be realized with URBN at $40 upon expiration at the end of this week. Above that the trader faces the risk of having to sell shares. (See our Education section)

URBN was up 2.63 percent to $39.48 on Friday, its highest close since early September, when shares gapped down from above $42 on disappointing guidance for same-store sales. The apparel retailer hit a low of $35 a month ago.

Total option volume in the name topped 19,800 contracts on Friday, 12 times its daily average for the last month. Overall calls outnumbered puts by 9 to 1.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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