Shares of Macy's pulled back yesterday after rallying for two weeks, but the department-store chain saw upside option activity after a positive analyst report.
showed that buyers came out in droves for the January 20 calls, some snapping up very large blocks for $0.15 and $0.20. Only 93 calls trade on average at the strike, but nearly 35,000 changed hands yesterday versus open interest of 8,214 contracts.
Macy's closed yesterday down 3.15 percent to $16.93. The shares had fallen from their 52-week high of $20.84 in mid-October but began to bounce back at the beginning of this month.
For the calls purchased yesterday to turn a profit, Macy's stock needs to rise roughly 19 percent by the time the options expire in mid-January. Overall calls at all strikes outnumbered puts traded by about 4.5 to 1.
The action followed comments Monday by Wedbush analyst Mark Benson, who said mall traffic had risen over the weekend as retailers increased promotions aimed at bargain hunters. He said Macy's had the highest traffic among department stores.
The company's next quarterly report, which will include results from this holiday shopping season, is scheduled for Feb. 23.
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Najarian owns Macy's calls.
Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of .