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December 13, 2012  Thu 2:45 AM CT

ANN: SEE CHART GET CHAIN FIND STRATEGIES
Shares of Ann have been trending lower for the last three months, and one trader is positioning for more downside in the women's apparel retailer in the near term.

optionMONSTER's tracking systems detected the purchase of 2,500 December 33 puts for $0.75 and $0.80 in less than 3 minutes yesterday. The volume was well above the strike's open interest of 941 contracts at the beginning of the day, so this was fresh buying.

ANN rose 1.95 percent yesterday to close at $32.87 after Cowen reaffirmed its "outperform" rating on the stock. Shares gapped up from the $28 level on strong earnings results and guidance in mid-August but have been stair-stepping lower since hitting a 52-week highs just shy of $40 a month later.

The options were not tied to any stock trading identified by our systems yesterday, though they could have been bought to hedge a long position established earlier. The put buyer could also be making a straight bearish bet that ANN will fall about 2 percent by expiration at the end of next week. (See our Education section)

Overall option volume in the name was nearly double its daily average in the last month. Puts outnumbered calls by roughly 2.5 to 1, a reflection of the session's bearish sentiment.
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As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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