Is Abercrombie and Fitch Co. (ANF) Unusual Options Activity Ahead of Earnings Hinting at a Move Lower?

Abercrombie and Fitch Co. (ANF) is a major clothing designer and retailer catering mostly to teens. ANF is trading at $20.56 around the upper end of its 52 week range of $19.34-$45.50. Year to date the stock has underperformed the market by quite a bit, at 28.46%. The stock dropped today by about 1.44% or $0.30. This move happened after an unusually large number of bearish options hit the tape this morning.

Early on a trader bought 3,500 of the ANF May 29th Weekly 18.5 Puts for $0.32 when the stock was trading at $20.73. This order was recorded about half an hour after the open on OptionHacker, and the stock dropped about $0.29 to $20.44 after the trade hit the tape. Over 3,600 contracts of the May 29th Weekly 18.5 Puts have been traded today hinting at bearish sentiment. The May 29th Weekly 18.5 Puts for $0.32 have traded as high as $0.34 today making this a profitable trade. This trader is most likely establishing a short position ahead of ANF earnings later on this week. I will likely look to get short ANF ahead of the earnings release based on the bearish activity in the options market we are seeing.

Trade: A trader bought 3,500 of the ANF May 29th Weekly 18.5 Puts for $0.32
Risk: $32 per 1 lot
Breakeven: $18.18