Abercrombie & Fitch has been rebounding, and traders are looking for the comeback to continue.
OptionMonster's tracking programs detected strong buying in the August 50 calls yesterday for $1.26 to $1.86. More than 4,500 traded in volume well above the previous open interest of 2,944 contracts, indicating that new positions were initiated.
Calls lock in the price where shares can be purchased, which can provide significant leverage to moves in the underlying stock. Shareholders also use these options to keep a stock from running away from them, helping to manage positions, but the contracts will expire worthless without a rally.