Tiffany call spread is bullish on earnings
A large call spread is apparently betting that Tiffany will report positive quarterly results next week.
optionMONSTER's monitoring program shows that 4,000 Weekly 64.50 calls that expire on May 27 were purchased for $2.30 to $2.40 and 4,000 Weekly 70 calls in the same expiration were sold for $0.51 to $0.54 yesterday. These are new positions, as volume was far above the open interest in both strikes.
This vertical spread is looking for TIF to rally above $64.50 by expiration a week from tomorrow. The sale of the higher-strike contracts reduces the cost of the long calls but limits potential gains, as the trader will be obligated to sell shares if they rise above $70. (See our Education section.)
TIF fell 1.43 percent to $63.96 yesterday and is down 9 percent in the last month. The jewelry icon reported bearish results on March 18 and is scheduled to announce its next quarterly numbers before the market opens on May 25, two days before yesterday's call spread expires.
Overall option volume in TIF was 4 times greater than average yesterday. Calls outnumbered puts by a bullish 3-to-1 ratio.
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