Put Players Target Volatile Abercrombie & Fitch Co. (ANF)

Put sellers and buyers are taking aim at Abercrombie & Fitch Co. today

by Karee Venema

Published on Dec 3, 2014 at 2:30 PM
Updated on Apr 20, 2015 at 5:32 PM

It's been a hot-and-cold day for Abercrombie & Fitch Co. (NYSE:ANF). The stock tumbled to a fresh five-year low of $27.23 out of the gate, after ANF posted a mixed third-quarter earnings report and downwardly revised its forecast. Additionally, the equity received a price-target cut to $40 from $46 at Jefferies, although the brokerage firm maintained its "buy" rating. At last check, though, the shares were up 4.1% at $28.97, recovering from last week's losses. Against this backdrop, option traders are using puts to bet in both a bullish and bearish fashion today.

Most active in ANF's options pits is the December 27.50 put, where nearly all of the 8,723 contracts traded have done so on the bid side, signaling seller-driven activity. With just 51 contracts currently in residence, it seems safe to assume new positions are being initiated. By writing these puts to open, speculators expect the $27.50 area to serve as a foothold for ANF through the close on Friday, Dec. 19 -- when front-month options expire.

Elsewhere, the equity's weekly 12/5 28-strike put has received notable attention. The majority of the 2,659 contracts traded here did so at the ask price, and volume outstrips open interest, indicating buy-to-open activity. The goal for these put buyers is for Abercrombie & Fitch Co. (NYSE:ANF) to settle the week -- when the series expires -- south of $28. More specifically, at-expiration breakeven is $27.64, or the strike less the volume-weighted average price of $0.36.


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