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On a day when the market is taking it on the chin, some decidedly bullish bets are emerging in retail land in the options pits. Case in point: Coach [COH
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Today, nearly 13,000 July 30 calls traded hands, nearly five time the open interest at that strike.
The stock is up today, in part on the release of of its Poppy collection, which is the more budget conscience brand of hand bags. The line goes on sale this Friday, but it's been pretty well received.
"They're reacting to the new consumer," said Mark Mandel, retail analyst over at FTN Equity Capital Markets (Neutral). "The lower price points should drive traffic, and right now, they're hoping to sell anything."
Still, no matter what's in the bag, it seem unlikely that it will be enough to drive Coach shares above the $30 dollar level before July expiration. The company has been the subject of buyout rumors in the past, but according to "Options Action" star Mike Khouw (and director of equity derivatives at Cantor), today's trading doesn't look like legitimate takeover action.
"Playing front month calls is tough. You really have to have your timing right, and if your 100% certain, you probably don’t want to leave those kinds of tracks," said Khouw.
Instead, Khouw said today's action had more to do with the actual price of the Coach's near-dated options.
"These calls are $0.25, less than 1% of the stock price. So for, $25 you can bet the company rallies above $30, or a little over 12% above where the stock is currently. Nice thing is that on a vol basis, they aren’t that expensive either - ~ 41% or so, right about on the 10 day realized."
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