Coach handbags may have been popular holiday gifts in December, but Coach stock continues to see its fair share of fans even into the new year. Tuesday afternoon, the January 2013 55-strike calls in Coach saw unusual activity, as more than 10,000 contracts changed hands.
Shortly after 1:00 p.m. Eastern Time, two blocks of about 5,340 each changed hands at this Coach LEAPS strike. One block traded for $9.70 and another traded for $9.60. A total of $10.3 million was spent on these transactions (average purchase price of $9.65 times 10,680 times 100). It appears as though these out-of-the-money call LEAPS were bought to open.
While there is no intrinsic value in these calls, there is ample time value as they do not expire for nearly 750 trading days. Delta for these calls currently stands at 56. For every $1 move higher or lower in the stock, the calls will gain or lose 56 cents. (more…)
Investors traded in-the-money calls in Kohl’s (NYSE:KSS) on Wednesday, possibly in anticipation of strong holiday shopping numbers from the retailer leading the way for a stronger 2011. For the most part, the retailer has enjoyed steady sales growth this year, posting same-store sales increases in all but two months of 2010. Most recently, November same-store sales grew by 6.1%, outpacing analysts’ consensus view.
Quiksilver, Inc. (NYSE:ZQK) was an unlikely name to come across our radar in Thursday’s trading. The apparel company, which caters to the young surfing, snowboarding, and skateboarding “dudes,” saw volume of close to eight million shares trade. This compares to average daily volume of less than one million. The shares were also markedly higher on the day, up more than 20%.
An investor who may be anticipating a slew of robin’s-egg-blue boxes under various loved ones’ trees this holiday season could be enhancing and extending his bullish trade in Tiffany & Co. (NYSE:TIF). At least that’s what some recent option activity could be indicating.
Video-game developer and distributor Electronic Arts (NASDAQ:ERTS) followed the rest of the market lower on Tuesday, dipping 3.6% to approach a six-month low by the closing bell. In the past year, the stock has underperformed the broader market indices, giving back about 14%.
New traders can sometimes be disappointed when they buy a call ahead of an earnings report. What if the company reports great earnings, the underlying stock moves higher, and the calls either break even or lose money?
When evaluating a trade, some investors look at the volume in the underlying stock as well as open interest, the bid/ask spread, and option volume in order to ascertain if liquidity is adequate. Some stocks tend to have more robust options volume than others, but “heavier” options volume does not necessarily mean the stock is of higher quality. Sometimes, we come across a stock that has seen notably heavy volume at one strike compared to another.
