Referencing the company's better-than-expected earnings performance in August, the stock popped on August 16 to $35 per share from $31 per share.
"But, what's bad is it has moved down to this danger zone where it looks like if it breaks $35 and starts heading down it could see a whoosh to the downside," Najarian explained.
Recently, he noted, one person stepped in and purchased "a ton" of the November $35 puts for $1.75. He explained that action as a "bet" that between now and November you could see the stock make a move downwards.
"I bought the puts, and I'll probably be in it until we see whether or not this $35 level holds, because if it doesn't it's not going to take long for it to break hard," Najarian said.
Shares of Urban Outfitters were lower during mid-afternoon trading on Monday.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
The team rates Urban Outfitters as a Buy with a ratings score of B. This is driven by several positive factors, which it believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks it covers. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. Although the company may harbor some minor weaknesses, the team feels they are unlikely to have a significant impact on results.
You can view the full analysis from the report here: URBN