Options Trading News

January 31, 2013  Thu 3:16 AM CT

One investor apparently thinks that Nordstrom is losing its mojo.

optionMONSTER's Depth Charge monitoring system detected the purchase of about 1,200 March 55 puts for $1.68 and the sale of a matching number of March 57.50 puts for $0.97. Volume was more than twice open interest at both strikes.

The trader probably owns shares in the Seattle-based retailer and is using the options as a hedge in a collar strategy. He or she is has locked in a minimum selling price of $55 and a maximum of $57.50. It cost $0.71 to open, so the effective sale price would be $55.71 to $58.21. (See our Education section)

JWN fell 0.16 percent to $55.59 yesterday. It rallied about 400 percent between early 2009 and the second half of last year but then stalled around the same $60 level where it peaked in early 2007. That could be leading some chart watchers to believe that it's at resistance and will push lower.

The next scheduled events that could serve as potential catalysts are the release of same-store sales on Feb. 7 and quarterly results on Feb. 21.

Total option volume was triple the daily average in Wednesday's session, according to the Depth Charge.
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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.

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