Liz Claiborne drew upside options for the second day in a row as the apparel retailer followed the rest of the sector higher this holiday shopping season.
Trading was heaviest Wednesday in the July 10 strike, where more than 5,300 calls were bought for $0.65, according to OptionMonster's real-time tracking systems. Call buying was also active in the April 7 and 8 contracts, and the volume was above open interest in all three strikes.
That follows upside activity on Tuesday in the January 6 calls, where more than 4,400 contracts were purchased. Liz Claiborne also saw bullish option action as its stock rose in a short squeeze after reporting earnings last month, though some selling took place a few days later.
The stock closed yesterday up 0.78 to $7.75, before slipping in Thursday's shorter trading session — as it continues to fill a downward gap from early May, which opened when the company reported a first-quarter loss and disappointing guidance. Since bottoming in July the stock has nearly doubled in price, bouncing first off its 200-day moving average in November and then its 50-day average last week (purple and black lines on chart, respectively).
For the options purchased yesterday to turn a profit, the stock would need to gain at least 37 percent by expiration on July 15 next year. The company, whose brands range from Kate Spade to Juicy Couture, is scheduled to release its next earnings report on Feb. 21.
Overall calls in the name yesterday outnumbered puts by more than 60 to 1.
Yamamoto does not hold significant numbers of shares of Liz Claiborne.
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Mike Yamamoto is an analyst and writer for OptionMonster.