Talbots Draws Bullish Options Activity

By Mike Yamamoto, managing editor of OptionMonster

HINGHAM, Mass. (TheStreet) -- Talbots(TLB Quote) shares rose sharply for the second straight session Wednesday along with upside options activity after FBR Capital Markets raised its price target on the women's apparel company by more than 60%.

The stock ended the session up 16.5% to $11.14 on more than six times the average stock volume, following a a 7.4% pop Tuesday. The shares, which hit $1.19 at the depths of the financial crisis last November, have spiked more than 30% since Friday.

Options activity was concentrated at the November 12.50 contracts, in which 2,243 calls traded in a strong buying pattern. Most of them were purchased for the asking prices of 65 cents to 90 cents, according to OptionMonster's real-time systems.

The Hingham, Mass., retailer averages just 10 calls traded daily at the strike, where the open interest of only 179 contracts indicated that Wednesday's trading represented newly opened positions. The purchased calls would profit only if the stock rises at least 18% to 20% by the time they expire on Nov. 20.

Talbots has struggled more than many retail competitors as it has tried to recover. But it got a much-needed boost when FBR Capital raised its price target for the stock to $13 from $8 and reiterated its "outperform" rating on the stock.