Ann has been sliding for months, but buyers are finally showing up.
Option activity was quiet in the name for most of Friday's session, but then a flurry of call buying hit less than 15 minutes before the close. Our Heat Seeker tracking system showed the volume focusing on the March 28 calls, with about 2,400 bought in volume well above the strike's previous open interest of just 559 contracts.
About 1,000 March 27 calls were bought shortly thereafter. The March 28 contracts mostly priced for $1.40, while the 27s fetched $2.10 to $2.30.
These long calls fix prices where shares can be purchased in the next two weeks. That will provide significant leverage if ANN rallies, but they can also become worthless from a modest decline in the stock price. (See our Education section)
ANN rose 0.46 percent to $28.42 on Friday after fighting its way into positive territory when the calls traded. Given the timing and the heavy volume, it appears that at least one large investor was building a position in the women's apparel retailer.
The stock exploded higher in August after quarterly results beat estimates. The next report in November was also strong, but management lowered its outlook early last month because of Hurricane Sandy and as customers shunned new fashions at its Loft chain.
Shares have now returned to the same level where they traded before the August rally. That could be leading some investors to think that the stock is cheap and want to get long before the next report, scheduled for Friday morning.
Total option volume was 6 times greater than average in the name, with calls outnumbering puts by about 9 to 1.
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