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Bears target Ralph Lauren at highs

David Russell (david.russell@optionmonster.com)

Ralph Lauren is stalling near last year's highs, and the bears are circling.

optionMONSTER's Depth Charge monitoring program detected the purchase of some 2,200 May 170 puts for about $1.68. A matching number of May 180 calls was sold at the same time for about $1.28. Volume was more than triple the previous open interest at each strike, indicating that new positions were initiated.

Known as a collar , the strategy cost some $0.40 and will profit from the fashion company declining in the next three weeks. The position also obligates traders to sell the stock for $180 if rallies above that level, so they probably own it already and are using the options to protect against a drop. (See our Education section for other hedging techniques.)

RL is up 0.11 percent to $175.80 in morning trading. It's currently parked around the same level where it peaked in March 2012, which could be leading some chart watchers to think that it's at resistance.

The company hasn't yet indicated when fourth-quarter earnings will be announced, but last year it occurred on May 22. If they follow a similar schedule this year, the release will fall after the May contracts expire.

Total option volume is 6 times greater than average so far today, according to the Depth Charge.

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