Huge trade remains bullish on Avon
David Russell | firstname.lastname@example.org
optionMONSTER's Heat Seeker monitoring program detected the purchase of some 19,000 July 22 calls for $1.65 and the sale of a matching number of July 17 calls for $6.30. Volume was below open interest in the 17s, indicating that an existing long position was closed and rolled to the higher strike.
The investor collected $4.65 and is still positioned to profit from further gains in the cosmetics stock. He or she probably bought the 17s at a much lower price and has earned big profits from the stock's 61 percent rally so far this year.
AVP fell 3.33 percent to $22.67 yesterday. The stock touched a 12-year low in November after a long leadership crisis hurt sales, but it's been rebounding since as the last two quarterly reports have beaten expectations.
It's now trying to hold its ground around the same level where it peaked in 2011 and 2012. Given that the gains have been slowing since April, the investor probably wanted to lock in his or her profits to guard against a potential pullback. (See our Education section for other ways to manage risk.)
Total option volume was 20 times greater than average in the session, with calls outnumbering puts by 28 to 1.