Traders are apparently betting that Kohl's will report strong quarterly results in three weeks.
More than 2,000 May 77.50 calls were purchased for $1.55 to $1.77 yesterday, according to optionMONSTER's Heat Seeker tracking program. Volume was more than double the strike's previous open interest, indicating that the activity represented new positions.
These long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. But the contracts can quickly lose value if the stock stalls or pulls back. (See our Education section)
KSS rose 1.15 percent to $76.78 yesterday. The stock pulled back after hitting an all-time high of $79.60 on April 2, just above an area that had been resistance in April 2007 and May 2002.
The department-store operator is scheduled to announce earnings on May 14, one day before yesterday's long calls expire.
Yesterday's total option volume in the name was more than triple its daily average for the last month. Overall calls outpaced puts by 2 to 1.
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