Options Trading News

February 22, 2013  Fri 2:14 AM CT

Francesca's shares have dropped with the rest of the market this week, but traders are betting on a limit to further downside in the apparel retailer.

optionMONSTER's Depth Charge system detected heavy selling in the March 22.50 puts, which saw more than 9,300 contracts trade in volume that was more than 5 times the previous open interest and therefore new activity. The trading was led by 3,700 puts sold at the bid price of  $0.95 at the same second yesterday afternoon.

These put sellers are betting that FRAN will stay above $22.50 through expiration in mid-March, just under its lowest close in the last eight months. If it falls below that strike price, the traders will face the obligation to buy shares at that level. (See our Education section)

FRAN fell 3.58 percent yesterday close at $25.07. Shares bounced from a recent closing low of $22.54 on Dec. 10 and had been trading sideways since the beginning of the year, but the stock fell sharply in the last two sessions amid the broader market selloff.

Yesterday's total option volume surpassed 15,700 in the name, which has averaged just 814 contracts per session in the last month.
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I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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