Bears Play Jones Apparel Before Report

By David Russell

One big investor is positioning for a markdown in Jones Apparel Group (JNY), which has more than tripled this year and reports earnings Wednesday.

optionMONSTER's Depth Charge monitoring program detected unusual buying of the November 15 puts, which traded 4,062 times for $0.25 to $0.30. Volume was more than eight times existing open interest in the strike.

JNY fell 2.5 percent to $17.94 in morning trading and is little changed over the last month. The parent of clothing and shoe stores including Jones New York and Nine West has been losing momentum as it approaches the $20 area where it traded shortly before last year's stock-market collapse.

The company will report third-quarter earnings before the bell Wednesday. It reported better-than-expected sales and profit the last time it issued results on July 29.

JNY needs to fall about 17 percent by expiration for the puts bought today to turn a profit.

The trade pushed overall options volume in the name to six times greater than average. Puts outnumbered calls by 87 to 1.

(Chart courtesy of tradeMONSTER)