Learn the trade here. Make it on tradeMONSTER

Options Trading News

February 8, 2013  Fri 3:16 AM CT

COH: SEE CHART GET CHAIN FIND STRATEGIES
Coach fell hard last month, and one investor is looking for a rebound.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 4,000 August 52.50 calls for $2.80 and the sale of an equal number of August 57.50 calls for $1.325. Volume was more than 5 times the previous open interest at each strike, so this is clearly new positioning.

The trade cost $1.475 to open and will earn a maximum profit of 239 percent if the specialty retailer closes at or above $57.50 on expiration. (See our Education section for more on the strategy, which is known as a bullish call spread because it leverages a move between two prices.)

COH fell 1 percent to $48.61 yesterday. It plunged on Jan. 23 after earnings lagged estimates and management announced a big change in its marketing strategy. Shares have been parked at long-term support around $50 since.

Using a call spread lets the investor take a shot with limited risk, looking for shares to retrace last month's bearish gap. It's an ideal strategy when a stock could have a dead-cat bounce but might also continue lower.

Total option volume in the name yesterday was almost twice its daily average, with calls dominating the action.
Share this article with your friends


Related Stories

COH

Traders shop for Coach rebound

October 15, 2014

The luxury handbag and accessories retailer is down nearly 40 percent this year, but traders are looking for a comeback.

COH

What's behind large call sale in Coach

October 13, 2014

The luxury retailer has found support once again just above the 52-week lows from July. Shares were up at resistance a month ago.

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Free Webinar Series

The 100K Challenge

Education & Strategy

Anatomy of a butterfly

One of the many esoterically named option strategies is known as a "butterfly." But don't be fooled: Like other advanced...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER