Coach, Inc (COH) is a marketer of high end accessories for both men and women. The company’s stock is currently trading around $56.00 in a 52 week range of $45.87-$61.94. The stock underperformed the market over the past 12 months with shares falling just over 2.5% over that period. Options action in COH during today’s session suggests that traders believe this trend is over and that there will be serious upside in COH through this year. Early in the trading day a trader bought 6,000 COH Jan 2015 Calls for $1.45. This trader is likely looking for a long term play on COH upside and with stock at current levels this is a rather aggressive target.

We believe that this order is large enough to justify a long position in COH with a time target to January of 2015. With shares of COH trading above the Ichimoku Cloud COH is also setting up for a long on the chart. The future cloud is upward sloping and implying further upside for COH. We also believe that this year will be a strong one for the sector COH operates in. The retail space was difficult to trade in 2013 but high end retailers held up relatively well. We believe that this trend will continue in 2014 and that this bullish order flow in COH confirms that theory.  On a risk to reward basis COH sets up well for a long at these levels.

Andrew Keene


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