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August 20, 2012  Mon 9:36 AM CT

ANF: SEE CHART GET CHAIN FIND STRATEGIES
Abercrombie & Fitch has been the rise, and one investor is looking for the gains to continue.

Today's option activity is dominated by a three-way combination in the September expiration. It entailed the purchase of 5,000 of the September 37 calls for $1.10, while 5,000 of the September 40 calls were sold for $0.34 and 5,000 of the September 32 puts were sold for $0.52.

ANF declined 0.75 percent to $35.66 in morning trading. The retail stock gapped down to a three-year low of $28.64 at the start of the month, but has regained that ground amid earnings. Shares are still down by more than 50 percent from late October.

The combination strategy is a bet that ANF will trade up to $40, but not much beyond, and that it won’t see much downside beyond $32. The total trade costs $0.24, which will be lost if the stock remains between $32 and $37. The maximum gain comes at or above $40.

Overall option volume is almost quadruple the daily average so far in the session.
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