Bulls Go Shopping Again at Staples

By Mike Yamamoto of OptionMonster

NEW YORK -- Staples ( SPLS) saw upside option activity last week, and on Wednesday the bulls came back for more.

OptionMonster's tracking programs detected the purchase of 10,000 January 13 calls for 35 cents and the sale of 10,000 January 9 puts for 30 cents. Volume was far above the previous interest in each strike, which indicates that new positions were opened.

This combination trade is highly bullish, as a rally will boost the value of the long calls while lowering the price of the puts that were sold. The strategy could provide significant upside leverage, but the trader will be on the hook to buy shares if they fall below $9.

On June 23, traders were buying the September 11 calls in another bullish bet that we reported on our InsideOptions Pro subscription service.

Staples rose 0.45% to $11.06 on Wednesday but is down 30% since the beginning of the year. The office-supply retailer has been closing stores to compensate for weak demand and has mostly reported disappointing quarterly results. But it's trying to hold support around the same level where it bounced in mid-2012, which could make some chart watchers expect a rebound.

Total option volume was 7 times greater than average in the session.

Yamamoto has no positions in SPLS.


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.