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What's behind calls in Abercrombie

Chris McKhann (chris.mckhann@optionmonster.com)

Calls are surging today in Abercrombie & Fitch, but the trading may not be overly bullish.

More than 5,000 each of the December 45 and January 50 calls have changed hands today, with the December trading less than open interest and possibly a closing transaction. Those calls have gone for $2.40 and the big block of 2,602 for $2.35, while the January calls have been sold for $1.15 down to $1.10, according to optionMONSTER's systems.

This appears to be a diagonal spread, with the trader is rolling short calls to a higher strike and a later date as the December 45s go in the money. This was likely done against long stock in a covered call position so it is slightly bullish, at least up to that $50 level. (See our Education section)

ANF is up another 2.6 percent this morning at $45.51, trading at its highest level since gapping lower on its May earnings results. The apparel retailer was down around $31 two weeks ago.

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