Bulls go shopping at Children's Place

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The retail industry's good fortune has largely eluded Children's Place this holiday shopping season, but option traders are showing optimism in the near term.

Activity was concentrated at the January 50 strike, where more than 2,600 calls were bought mostly for $1.70 against open interest of 1,818, according to OptionMonster's real-time tracking systems. Of more than 4,900 total options traded in the name yesterday, only 30 were puts.

Children's Place closed yesterday at $49.60, up 0.22 percent on the session. Shares had been trading at 52-week highs in mid-October before gapping lower when the company significantly reduced its third-quarter earnings forecast.

The stock rebounded after beating earnings expectations last month but petered out as Christmas approached, lagging far behind the rest of the retail sector. Some analysts have speculated that, while shoppers came out in force this season, they have avoided higher-priced specialty stores such as Children's Place.

That has not deterred at least some option traders, who are hoping for a relatively modest pop in shares by the Jan. 21 expiration. The stock would need to rise roughly 4.3 percent for the calls bought yesterday to turn a profit.

The company's next earnings release is scheduled for March 7.


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Mike Yamamoto is an analyst and writer for OptionMonster.