OptionsHouse

Options Trading News

June 20, 2013  Thu 4:45 AM CT

AVP: SEE CHART GET CHAIN FIND STRATEGIES
One investor is adjusting a position in Avon Products after making a fortune in the name.

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.
Share this article with your friends


Related Stories

AVP

More bearish trades target Avon

April 14, 2015

The cosmetics icon had been scheduled to hold its investor day on May 13 but last night delayed it until the fall.

AVP

Bears rolling with Avon Products

April 10, 2015

The cosmetics icon has lost more than 40 percent of its value since mid-2014, with poor management and eroding market share as the main culprits for the decline.

Invest Like a Monster - San Diego: June 26-27

Premium Services

Education & Strategy

Vega

There is another Greek which measures the effects on an option's price buy changing the amount of extrinsic value in the option, and that Greek is Vega...

View more education articles »