Traders are looking for Kate Spade to come back in fashion.
Nearly August 25 calls were purchased for $0.55 to $0.65 yesterday, according to optionMONSTER's Heat Seeker tracking program. This represents fresh buying, as open interest in the strike was only 50 contracts before the trades appeared.
These long calls lock in the price where the stock can be purchased through mid-August no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $25. (See our Education section)
KATE fell 4.31 percent to $21.54 yesterday, its lowest level in two years. The handbag retailer gapped down from above $32 after its last earnings report on May 7 and has been declining steadily ever since. The next quarterly results are expected to come out the week before yesterday's calls expire on Aug. 21.
Yesterday's overall option volume in the name was more than 17 times its daily average for the last month. Overall calls outpaced puts by a bullish 5-to-1 ratio.
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