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Upside play in L Brands at key level

Mike Yamamoto (mike.yamamoto@optionmonster.com)

One trader is looking for L Brands to hit a new all-time highs in the next month.

optionMONSTER systems detected the purchase of 2,500 November 65 calls mostly for $0.20 and the sale of roughly the same number of November 52.50 puts for about the same price. Volume was well above the previous open interest at each strike, indicating new activity.

This combination trade is highly bullish, as a rally will increase the value of the long calls and lower the price of the puts that were sold . But the opposite will occur if the stock falls, and the trader will be on the hook to buy shares if they are below $52.50 by expiration in mid-November. (See our Education section)

LTD rose 2.37 percent to $59.23 on Friday, closing back above its 50-day moving average for the first time in about two weeks. The retailer hit a lifetime high of $64.14 on Oct. 4 and immediately pulled back, falling sharply four sessions later when it reported weak monthly same-store sales. But shares bounced off their 100-day moving average the next day and have been grinding higher since.

Formerly known as Limited Brands, the retailer's labels include Victoria's Secret, Bath & Body Works, and Henri Bendel. The company has not yet scheduled its next earnings report.

Total option volume in the name was just under 7,400 contracts on Friday, nearly 4 times its daily average for the last month. 

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