Coach Options Attract Retail-Savvy Bulls

OptionMonster co-founder Pete Najarian provides options picks Monday, Wednesday and Friday in TheStreet.com's Deep in the Money Calls newsletter.

Jon "DRJ" Najarian, co-founder of OptionMonster.

Coach(COH Quote) is gaining with upside options activity despite broad market headwinds, indicating that fashion is not yet a victim of the economic downturn.

The upscale accessories retailer normally trades 3,400 calls in a full session, but this morning more than 16,300 changed hands in the first two hours alone, according to OptionMonster's proprietary tracking programs.

The Coach trading follows a Barron's article that quoted Chris McHugh of Turner MidCap Growth Investor Fund(TMGFX Quote), citing his bullish outlook for the company. McHugh said it is well positioned to profit from a weaker economy, noting that it will soon introduce its Poppy line of lower-priced handbags.

Today's options action was in contracts well out of the money, the July 29 and July 30 calls, as Coach shares traded at $26.69. The stock is up more than 2% today to $26.78 in afternoon trading, holding the bulk of its gains against a 170-point selloff in the Dow Jones Industrial Average.

The writer invests in Coach.