Williams-Sonoma (WSM) investors have seen nice gains this year, as the stock is up more than 18% and continuing to make new highs. Paper is showing bullish activity as well. The stock has really taken off since beating earnings in May by four cents a share. The premium home goods maker is performing well as the economy improves and is trading well above the Ichimoku cloud on the daily chart.
This bullish activity comes as one if its biggest competitors, Pier 1 Imports (PIR), heads lower after an earnings disappointment and forward guidance projection cuts. Investors see Williams Sonoma as a safe bet in the space and look for it to continue its upward run.
Today a trader sold 2000 WSM Jul 70 puts for $0.95. Going short put options could be either speculation to the upside or a hedge against a long stock position. If the trader doesn’t have a stock position against these options, then this would be considered bullish activity in WSM. The trader collected $190,000 but took on considerable downside risk if the stock goes to zero. This risk-reward setup would be considered unfavorable by itself.