Michael Kors butterfly takes wing

optionMONSTER

A three-way trade is targeting specific gains in Michael Kors.

optionMONSTER systems show that a trader bought 1,500 each of the May 100 and 110 calls for $1.21 and $0.18 respectively. At the same time, he or she sold 3,000 May 105 calls for $0.43.

This butterfly spread costs the trader $0.53, which is the maximum loss if shares remain below $100 or climb above $110 by expiration in mid-May. The maximum potential gain of $4.47 would be realized only with KORS right at $105 at that time. Butterfly spreads are very inexpensive ways to make directional plays, but the range has to be correct for them to profit. (See our Education section)

KORS finished yesterday at $93.27, up 0.56 percent on the session. The high-end fashion retailer was down at $80 going into its earnings report in early February but was at a high of $101.04 a month ago.

Just shy of 11,000 KORS options traded yesterday, more than twice its daily average for the last month.

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