American Eagle Outfitters, which is currently trading at 14.20, saw a large ?sweep? order trade in the May contract month.? Traders, through the system, primarily bought the May 19 calls, the 20 calls, and the 21 calls totaling about 10,000 contracts.? In the process the trader ran May IV up about 3 points for 39% up to 42%, flattening the call side of the curve.
Considering the time to expiration and the strike selection this call buy is likely an in expensive bet on AEO having a good quarter and potentially a good winter/spring season.? These also could be a flier on some sort of merger or acquisition.? This is an order to watch.
Traders looking to piggy back this trade should consider buying near the money calls at the 15 strike for 1.00 or while selling the now elevated call curve.