Abercrombie & Fitch Co. (ANF) Traders Cheer Changing of the Guard

Abercrombie & Fitch Co. announced the retirement of CEO Michael Jeffries

Karee Venema

Dec 9, 2014 at 2:32 PM

It's out with the old, and in with the new at Abercrombie & Fitch Co. (NYSE:ANF), which earlier announced the unexpected retirement of CEO Michael Jeffries. The departure of the controversial executive is being well-received on Wall Street, with shares of ANF up 7.6% at $28.35 -- erasing nearly all of last week's analyst-induced losses. Option traders are responding in kind, scooping up calls at a rate 1.7 times what's typically seen at this point in the day.

Receiving the most attention thus far is ANF's January 2015 28-strike call, where 4,146 contracts have changed hands. The majority of these crossed on the ask side, implied volatility has jumped 4.5 percentage points, and volume outstrips open interest, making it safe to assume new positions are being purchased.

Today's call buyers stand to profit if ANF is docked north of breakeven at $29.57 (strike plus the volume-weighted average price of $1.57) at the close on Friday, Jan. 16 -- when the back-month series expires. Risk, meanwhile, is capped at the initial cash outlay, should Abercrombie & Fitch Co. (NYSE:ANF) close south of the strike price at expiration.

Follow @Schaeffers

You Don’t Need 25 Alerts -- You Need ONE You Can Trust!

That’s the idea behind Trade of the Week, Schaeffer’s newest trade alert.

Every Monday morning before the opening bell, you’ll receive a single, expertly researched trade recommendation -- built from the same proprietary research we’ve been using for over four decades.

It’s not just a signal.

It’s a plan designed for traders who are tired of jumping from alert to alert without ever finding their edge.

No juggling alerts. No switching directions mid-week. Just one clear, expertly researched trade idea -- delivered before the market even opens.

👉 JOIN RIGHT NOW FOR JUST $1 TO GET THE NEXT TRADE!