Unusual Options Activity: L Brands (LB)

Shares of consumer apparel giant L Brands (LB) have been in a strong uptrend over the past six months. One trader sees the possibility of a further move higher in the coming days.

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  • That’s based on the July 9 $77 calls. Expiring in 10 days, over 3,820 contracts traded against an open interest of 125, for a 31-fold rise in volume. The buyer of the calls paid about $0.72 on average.

    Shares of L Brands last traded near $72, so shares would need to rise another $5 for the option to close in-the-money in the next few days. Shares hit a new 52-week high as this trade was made, but still trade under the company’s all-time high set in 2016.

    The reopening economy trade has fared well for the company, as well as the announcement of a plan to spin off a number of the company’s brands into different companies, with shares up 378 percent over the past year.

    Action to take: Investors may like shares here, as they’re likely to be spun off into a number of different other companies. For now, shares yield 0.2 percent, a bit on the low side.

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  • Traders playing the current momentum in the stock might like these July calls, but look to clear out with a modest mid-double-digit profit. For bigger profits, give an options trade in the company more time to play out with a later strike date.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.