Bulls Shop at Abercrombie & Fitch

Abercrombie and Fitch
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Abercrombie and Fitch

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.

Abercombie & Fitch rose 3.77 percent to $47.93 yesterday. The specialty retailer had rough couple of months in May and June, falling after its last earnings report and then along with the rest of the market. But the stock rose sharply after bouncing at the $44 level last week and is now back above its 200-day moving average.

Total option volume was five times greater than average in the session, with calls outnumbering puts by 2 to 1.

—By CNBC Contributor Pete Najarian

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Mike Yamamoto is managing editor of OptionMonster.com. Yamamoto has no positions in ANF