U.S. Markets close in 1 hr 27 mins

Call spread looks for Tiffany to sparkle

David Russell (david.russell@optionmonster.com)

Tiffany is near the lows of its recent trading range, and one investor is looking for a rally.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 1,520 December 62.50 calls for about $2.50 and the sale of a matching number of December 67.50 calls for $0.82. Volume exceeded open interest at both strikes, indicating that new positions were initiated.

The investor paid about $1.68 and will almost triple their money if the jewelry retailer closes at or above $67.50 on expiration. (See our Education section for more on the strategy, known as a bullish call spread because it leverages a move between two price points.)

TIF is up 0.7 percent to $61.84 in afternoon trading. It rallied more than 25 percent between June and September, but has been trapped in a range since then. The next earnings report is scheduled for Nov. 29, which could potentially send the send the shares higher and turn the call spread into a winner.

Overall option volume in the name is slightly above average so far today, with calls outnumbering puts by more than 4 to 1, according to Heat Seeker.

More From optionMONSTER