Options Trading News

December 28, 2012  Fri 10:50 AM CT

ANN has fallen with other apparel retailers this week, but one trader is betting that an important support level will hold.

optionMONSTER's tracking systems show that 2,000 January 32 puts were sold at the same second for $1.10 this morning. The volume was nearly 4 times the strike's open interest at the beginning of the day, clearly indicating that this is a new position.

This put seller is looking for the women's clothing company to close above the $32 strike price at expiration in three weeks. If shares are below that level, the trader will face the obligation to buy the stock at an effective price of $30.90 when the credit from the put sale is included.

ANN is down 0.47 percent to $31.96 near midday trading. Shares dropped to support at current prices on the day after Christmas when the retail sector was hit hard by a disappointing holiday-sales report.

The stock has been trending lower with its 50-day moving average since early November. The $32 level is key because ANN gapped up to this area from about $28 in mid-August with a strong second-quarter earnings report.

The trading made up the bulk of ANN's total option volume of 2,754 so far today, which is already 7 times its daily average for the last month.
Share this article with your friends


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »