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Bulls think Chico's is worth a shot

David Russell (david.russell@optionmonster.com)

Retail has been weak, but traders apparently believe that there's something special about Chico's FAS.

optionMONSTER's Heat Seeker monitoring system detected the purchase of about 2,400 January 18 calls this morning, most of which priced for $0.45. Volume was more than 12 times the previous open interest in the strike, indicating that new money was put to work.

These long calls lock in the price where shares can be purchased in the company, which targets women shoppers over the age of 30. The holders now know that they won't miss a rally and are risking much less capital than they would by owning shares directly. (See our Education section for more on how to manage trades more effectively with options.)

CHS is down 2.07 percent to $16.06 and has fallen 13 percent so far this year. While the company's quarterly results have missed expectations, investors and analysts have cited its long-term growth potential. In particular they see it benefiting from the Soma Intimates brand as lingerie giant Victoria's Secret pursues younger shoppers.

The stock is also trying to hold the same $16 area where it peaked in May 2012, which could make some chart watchers think that it's due for a bounce. The next earnings report comes on Nov. 26, before today's upside contracts expire.

Total option volume is 7 times greater than average so far in the session, according to the Heat Seeker. Overall calls outnumber puts by a bullish 20-to-1 ratio.

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