NEW YORK -- Kohl's ( KSS) saw upside option activity repeatedly last month, and the bulls are back ahead of its earnings report this week.
OptionMonster's Heat Seeker system detected heavy buying in the May 77.50 calls on Friday as more than 11,000 traded for 55 cents to 75 cents, including a single print of 7,700 that went for the ask price of 65 cents. Volume topped previous open interest of 5,450 contracts, an indication that new money was at work.
Traders had already snapped up calls in the same strike on April 23. That was followed by May 75 call buying three sessions later.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
Kohl's rose 1.25% to $74.28 on Friday. The department-store operator retreated a month ago from an all-time high of $79.60, which was resistance in 2002 and 2007. Near-term catalysts for the company include industry retail sales on Wednesday and quarterly results Thursday.
Friday's overall option volume in Kohl's amounted to a whopping 22,800 in the session, almost seven times average amounts. Calls accounted for a bullish four-fifths of the total.
-- Written by Mike Yamamoto of OptionMonsterYamamoto has no positions in the stocks mentioned.