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Bulls Are Shopping at L Brands

By David Russell, reporter at OptionMonster

NEW YORK -- L Brands (LTD) popped on strong same-store sales earlier this month, and the bulls came back to the store on Friday.

OptionMonster's tracking programs detected the purchase of some 3,000 May 48 calls, most of which priced for $1.30 to $1.40, in volume above the previous open interest of 2,110 contracts. There was also heavy trading in the May 50s for 55 cents to 61 cents.

Calls lock in the price where investors can buy shares in the retail company, formerly known as Limited Brands. That gives these contracts the potential to generate significant leverage in a rally, but they'll lose most or all their value if the stock drops or doesn't move.

L Brands shares rose 1.13% to $48.42 in the session. The stock ripped as high as $51.25 on April 11 after March same-store sales rose 3%, beating analysts' expectations.

The strength occurred across its chains, which include Victoria's Secret and Bath & Body Works. The shares then retreated, but Friday's option activity is looking for them to continue higher over the next four weeks.

Total option volume was 6 times greater than average in the session, with calls outnumbering puts by a bullish 19 to 1.

Russell has no positions in LTD)

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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