Options Alert: Call Buyers Target Candle Shop
Bath & Body Works has been climbing this month, and yesterday the options got active.
Heavy buying was detected in the July 24 calls in the final hour of trading on Monday. The initial blocks priced for $0.85, with premiums climbing to $1 as the stock rose. Some 14,000 contracts changed hands, more than 750 times previous open interest at the strike. That suggests new positions were opened.
Calls fix the price where a security can be purchased. They can appreciate when shares move higher, sometimes generating leverage because of their relatively low cost.
BBWI rose 2.8 percent to $23.50 yesterday and is up 17 percent so far in June. Monday's call buying might be viewed as bullish, with traders potentially expecting more upside through expiration on July 17.
The seller of personal-care products and fragrances hit a multiyear low last November and moved sideways for the next six months. It jumped on May 27 after earnings and revenue beat estimates. Last week, the company announced a deal to sell merchandise in Ulta Beauty (ULTA) locations.
BBWI also trades for less than 10 times earnings, which could make some traders view it as a value stock.
Overall option volume was about 4 times greater than average in the name, according to TradeStation data. Calls accounted for 97 percent of the total.
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