U.S. Markets close in 2 hrs 24 mins

Bulls shop at Ascena before earnings

David Russell (david.russell@optionmonster.com)

Traders are shopping for strong results in Ascena Retail, which reports earnings on Wednesday.

optionMONSTER's Heat Seeker system on Friday detected the purchase of more than 2,800 December 20 calls, most of which priced for $0.75 to $0.80. The volume was above the open interest of 1,947 contracts, indicating that new positions were initiated.

Calls lock in the price where investors can buy shares. They can generate significant leverage in the event of a rally but become worthless if the stock fails to move.

ASNA, which fell 0.79 percent to $20.10 on Friday, has been finding support at its 200-day moving average in the last month. The stock has steadily trended higher since 2009 amid strong results, though earnings missed estimates in May and guidance was weak in September.

Formerly known as a Dress Barn, ASNA has seen growth more recently at its Justice and Maurices locations.

Total option volume was 14 times greater than average in the stock on Friday, with calls outnumbering puts by 23 to 1.

(A version of this post appeared on InsideOptions Pro yesterday.)

More From optionMONSTER