Options: Retailers Dominate Trading Activity

By Jud Pyle, CFA, chief investment strategist for the Options News Network

Right out of the gate today, investors boosted options volume and expressed mixed sentiment on retail stocks the first trading day after June expiration.

Starting off with Abercrombie & Fitch(ANF Quote), an investor bought the Nov. 30-35 call spread 5,000 times, and simultaneously sold 5,000 Nov. 17.5 puts; the investor paid 20 cents to do this multi-legged trade.

ANF has been under pressure for months due in part to declining sales numbers, and the shares are currently trading down 55 cents to $25.46. It's interesting to note, however, that at least one investor is expressing bullishness on the clothing retailer today.

The Nov. 30 calls are home to current open interest of 982 contracts, while the Nov. 35 calls are home to current open interest of 281 contracts. The Nov. 17.5 puts are home to current open interest of 577 contracts. ANF shares have climbed more than 70% since Nov. 20 when the shares dipped to a 52-week low of $14.15. However, they are down from the low 30s reached in early June.

JC Penney(JCP Quote) shares have dropped 40 cents to $26.20 so far today, but one investor is expressing bullishness on the retailer and sold 5,000 July 22 puts for around 40 cents. JCP stock was trading at $25.81 at the time of this trade.

The in-the-money July 22 puts, which are currently trading down two cents on the day, are home to current open interest of 275 contracts. JCP did not announce significant news today, but at least one investor could be betting that the stock has more room to rally. The investor needs JCP shares to expire higher than $21.60 come July expiration to make money -- the stock does not necessarily need to rally, it just needs to hold around its current levels. JCP stock has rallied 85% since reaching a 52-week low of $14.18 on March 9.