GO
Loading...

Bears are shopping at American Eagle

David Russell | Writer, OptionMonster
Tuesday, 30 Jul 2013 | 5:53 AM ET
David Paul Morris | Bloomberg | Getty Images

Traders may be shopping for a drop in American Eagle Outfitters, which has been trending lower for almost a year.

OptionMonster's tracking systems detected the purchase of some 6,500 August 19 puts, most of which priced for $0.35 to $0.45. Volume was more than twice previous open interest at the strike.

Puts lock in where shares can be sold, giving them a strong inverse correlation to the underlying price. They'll gain in value if the retailer continues to fall, letting investors hedge long positions in the stock or speculate on a selloff.

More mergers ahead as retail goes shopping
Where to put your money in retail, with Jan Kniffen, CEO of Worldwide Enterprises, and Dana Telsey of Telsey Advisory Group.

American Eagle rose 0.31 percent to $19.26 yesterday but has been posting lower highs and lower lows since September. It's now stalling at its 100-day moving average once again, which be leading some traders to expect a decline in the near term.

Total option volume was 12 times greater than average in the session. Puts outnumbered calls by a bearish 15-to-1 ratio.

—By CNBC Contributor David Russell

Additional News: Bosses lament: Sales jobs hard to fill

Additional Views: How to evaluateretailer stocks: Pro

___________________________
Options Trading School:

___________________________
Disclosures:

David Russell is a reporter and writer for OptionMonster. Russell has no positions in AEO.

___________________________

Disclaimer

  Price   Change %Change
AEO
---

Featured