One big investor apparently thinks that JCPenney may rally in the next two weeks and is using options to leverage the move.
OptionMonster's tracking systemsdetected the sale of about 6,500 October 31 puts for $0.60 and the purchase of a similar number of October 34 calls for $0.50. Volume was more than four times open interest in both strikes.
JCPenney rose 0.89 percent to $32.97 on Friday. The department-store operator has been consolidating between $25 and $35 since early April while making higher lows, which may cause some chart watchers to expect a breakout soon.
- Options Tips from Jon Najarian
- Read The CNBC Stock Blog
- Options Tips from Pete Najarian
Friday's options trade resulted in a credit of $0.10 per call contract purchased. It will make money if JCPenney closes above $34 at expiration and generate losses below $30.90.
Later in the session, other investors purchased about 3,200 more October 34 calls for $0.65 and $0.70. New money also flowed into the October 33 calls, which traded 1,926 times against open interest of 1,674 contracts. Large purchases for $1.05 and $1.20 accounted for most of the activity.
The next scheduled event that could serve as a potential catalyst is the release of September same-store sales on Thursday, Oct. 8. The stock is up 11 percent since its last report on Sept. 3, when it missed analysts' estimates.
The activity pushed overall options volume in JCPenney to five times greater than average.
JCPenney Competes With:
Options Trading School:
David Russell is a reporter and writer for OptionMonster.