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On Friday, Abercrombie & Fitch Co. (ANF) tagged a new annual high of $50.10. Following this news, option shoppers flocked to the clothier, sending volume to 37,000 contracts -- nearly triple ANF's usual daily volume of roughly 13,000.
Puts were especially popular, with roughly 22,000 contracts traded. Most popular was the soon-to-expire April 48 put, which had volume of 4,817 contracts change hands -- more than half at the ask price, suggesting they were bought. Over the weekend, open interest increased by 3,463 positions, to 4,381, confirming that new contracts were added at this strike.
By buying to open the April 48 put, skeptical traders are betting that ANF will fall below the $48 level by this Friday's close --when April-dated options expire.
Option players have some reason to be skeptical of ANF; the stock's Relative Strength Index (RSI) is perched at 70 -- flirting with "overbought" territory.
However, Friday's skepticism toward ANF is out of line with recent sentiment, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.94 -- just six percentage points away from an annual bullish peak.
Furthermore, this morning, ANF hit yet another annual acme of $50.77, as analysts at Caris, Barclays, and Jefferies raised their price targets on the retailer. The stock has been guided higher along support of its 10-week and 20-week moving averages, which completed a bullish cross at the end of March.
What's more, with nearly 13% of the stock's float tied up in short interest, there is ample sideline cash available to help continue ANF's recent rally.