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Traders aren't calling on Avon upside

Chris McKhann (chris.mckhann@optionmonster.com)

Avon Products is holding recent gains, but one trader apparently believes that further upside will be limited.

More than 14,000 AVP options have already changed hands this morning, almost twice its daily average in the last month. Virtually all of the volume is in the July 24 calls, led by a print of 9,982 that was sold for $0.57. The volume was far above the strike's open interest of 231 contracts before the session began, clearly showing that this is a new position.

This call selling is a bet that AVP won't see new highs. The options could have been sold naked with an initial bearish bias, or they could have been traded against long stock in a covered call strategy. The latter would be bullish up to the strike price, but not beyond. (See our Education section)

AVP is up fractionally this morning to $20.65. The costmetics icon ran up from support at $14 in the last six weeks but has been unable to hold above resistance at $21 in recent days.

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