Liz Claiborne attracted heavy call buyinglate Friday amid reports that it was shopping its Mexx brand to private-equity firms.
OptionMonster's Heat Seeker system shows that 8,436 October 6 calls traded in a strong buying pattern, including one block of 6,046 contracts that went for $0.40. The volume was 3 times the open interest at the strike, so these were new opening positions.
LIZ has an average daily volume of just 748 options at all strikes, but Friday it saw nearly 13,000 contracts trade. Of those, a mere 21 were puts.
The stock closed Friday up 2.19 percent to $5.14. (See ticker for today's quotes.) The apparel company has been trading below all of its major moving averages for about a month.
Bloomberg reported Friday afternoon that Liz Claiborne is in talks with various private-equity firms about the possible sale of Mexx, the company's largest division. Sources told the news service that the brand, which brings in about a third of LIZ's revenue, could go for $100 million.
For the calls bought Friday to turn a profit, the stock would need to gain 25 percent by expiration on Oct. 21.
The company is scheduled to report earnings results on July 28.
Yamamoto has no positions in LIZ.
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Mike Yamamoto is an analyst and writer for OptionMonster.