Tiffany pulled back on Friday, and traders were shopping for a rebound.
OptionMonster's tracking programs detected the purchase of about 3,000 May 75 calls for $1.01 to $1.05. The volume was more than twice the previous open interest at the strike, indicating that this is fresh buying.
These calls lock in the price where shares can be purchased in the jewelry retailer no matter how high it might rise. They can generate significant leverage in the event of a rally, letting investors place upside bets at a cost much lower than buying the stock outright, but will expire worthless if Tiffany remains below the $75 strike price through expiration in mid-May.
The company's earnings don't come out until May 28—after the calls expire—so it appears that traders are placing pure momentum bets. Total calls outnumbered puts by a bullish 6-to-1 ratio in the session.
Tiffany fell 0.97 percent to $72.67 on Friday. The stock is up 27 percent this year and hit a new 52-week high earlier in the week.
—By CNBC Contributor David Russell
Options Trading School:
David Russell is a reporter and writer for OptionMonster. Russell has no positions in TIF.