Speculators Stay Positive on Michael Kors Holdings Limited (KORS)

Options traders may already be preparing for Michael Kors Holdings Ltd's (KORS) earnings report

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Published on Jan 14, 2015 at 3:31 PM
Updated on Apr 20, 2015 at 5:32 PM

This morning Michael Kors Holdings Ltd (NYSE:KORS) gapped down to $65.10 -- its lowest mark since July 2013. At last check, KORS was still off 3.2% at $66.22. Even with today's drop, though, options bulls are targeting the stock's February series, ahead of the company's earnings report, tentatively scheduled for early next month.

Digging deeper, calls are trading at four times normal intraday levels. Most popular by a large margin is the February 70 strike, with data giving the impression of mostly buy-to-open activity. (A small portion of this volume can be attributed to a bull spread that was initiated today with the February 75-strike call).

These traders may be looking for KORS' fiscal third-quarter earnings report to boost the stock past the $70 level before the contracts expire at the close on Friday, Feb. 20. If history is any indicator, these option bulls may be in luck, as the security has averaged a 3.2% gain in the session following its last eight trips to the confessional -- including a 17.3% pop last February.

From a technical perspective, Michael Kors Holdings Ltd (NYSE:KORS) has struggled of late, underperforming the broader S&P 500 Index (SPX) by nearly 11 percentage points in the last three months. What's more, the stock could now be facing resistance from its 10-day moving average, which thwarted a recent rebound attempt.


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