Why one trader is selling puts in Saks


Saks is getting an early vote of confidence before it reports earnings tomorrow morning.

optionMONSTER's tracking systems show that 2,455 November 11 puts were sold in 4 minutes on Friday for an average price of $0.82. Open interest in the strike was just 282 contracts before the session began, indicating that this is a new short-put position.

The put seller is betting that SKS will stay above $11 through mid-November, in the middle of a range that goes back to early 2012. If the stock drops below that level, the trader will be on the hook to buy shares at an effective price of about $10.18 once the credit from the put sale is factored in. (See our Education section)

SKS was down 0.5 percent on Friday to close at $11.85, near a resistance level around $12 that has been in place for more than two years. The luxury retailer spiked to $12.16 on April 12, its highest price since April 2011.

The company is schedule to report first-quarter results tomorrow at 9:30 a.m. ET . Total option volume in the name was 4,276 contracts on Friday, 5.5 times its daily average for the last month. 

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