Burlington draws bulls before report
Burlington Stores is attracting bullish option activity ahead of its earnings report next month.
optionMONSTER's Heat Seeker system found heavy buying in the December 35 calls yesterday, where more than 5,700 traded for $2.69 to $3.30. These are clearly new positions, as previous open interest in the strike was just 54 contracts.
These long calls lock in the price where the stock can be purchased through mid-December no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $35. (See our Education section)
BURL rose 1.26 percent to $34.49 yesterday. The stock gapped up from the $29 level with a strong same-store sales forecast in mid-July and reached a 52-week high of $35 on Tuesday.
The discount clothing retailer, formerly known as Burlington Coat Factory, is scheduled to release quarterly results on Sept. 9. The company, which was acquired and taken private by Bain Capital in 2006, went public last October.
Yesterday's call buying made up almost all of Burlington's total option volume, which was more than 18 times its daily average for the last month. Only 14 puts traded in the entire session, an indication of the bullish sentiment.
More From optionMONSTER
