One big investor is bullish on Abercrombie & Fitch , attempting a three-way options strategy to maximize gains from a move higher.
optionMONSTER’s tracking systems detected the purchase of 5,000 November 30 calls for $2.15, matched against the sale of 5,000 November 35 calls for $0.90 and the sale of 5,000 November 17.50 puts for $1.05. The trade produced a net debit of just $0.20 per call contract bought before commissions.
ANF is down 1.38 percent to $25.65 in morning trading. Today’s options strategy will profit if the retailer closes above $25.20 at expiration and produce a maximum profit of 2,400 percent if the stock rises above $30.
By selling puts in addition to upside calls, the trader significantly reduced his or her cost basis but is also exposed to losses on the short put position if ANF falls below $17.50. The next potential catalyst for ANF is the release of June sales on July 9.
