New highs anticipated for L Brands
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring system detected the purchase of some 5,400 June 55 calls, most of which priced for $0.30. Volume was 15 times greater than open interest at the strike, indicating that new money was put to work.
These long calls lock in the price where investors can buy shares in the retail company, whose main brands are Victoria's Secret and Bath & Body Works. Their cheap price gives them the potential for significant leverage if the stock rallies, while also limiting the amount of money that can be lost in a pullback. (See our Education section)
LTD is up 2.42 percent to $51.96 in afternoon trading. Last month its sales at stores open for at least a year rose just 2 percent, less than half the 4.6 percent gain expected by analysts in a Thomson Reuters survey.
Today's call buyers apparently think that miss was an anomaly and are hoping for a positive surprise this week. The stock has never traded above $53.50, so the traders are also looking for a breakout to new highs.
Total option volume in LTD is 6 times greater than average. The Heat Seeker shows calls outnumbering puts by a bullish 16-to-1 ratio.