OptionMonster's tracking programs detected unusual activity in the afternoon, starting with the purchase of more than 1,800 Weekly 38.50 calls expiring on Sept. 26 for 25 cents. A few minutes later they turned to the February 41s in much larger numbers, snapping up more than 10,000 of those contracts for $1.20 and $1.25.
Volume was more than 28 times open interest at both strikes, which indicates new money was put to work on the long side. The unusual activity was cited by OptionMonster co-founder Jon "DRJ" Najarian CNBC's "Fast Money" program after the close.
Long calls lock in the price where investors can buy a stock, letting them position for gains at limited cost. They can also generate significant leverage if a rally unfolds, but the contracts can lose value on a pullback.COH rose 2.05% to $37.27 on Thursday. The luxury-accessories retailer lost more than 30% of its value early this year, cratering along with other consumer-discretionary names after a poor holiday season. But the stock rebounded after a strong quarterly report on Aug. 5 and is now back above its 50-day moving average. Total option volume in Coach was six times greater than average in the session, with calls outnumbering puts by a bullish 8-to-1 ratio. Najarian is long COH; Russell has no positions in the name.