Call-Buyers Go Shopping at Macy's

NEW YORK -- Macy's(M) has been on and off OptionMonster's tracking systems many times in recent months, and unusual activity returned Tuesday.

Upside calls were building in August contracts with earnings results before the bell Wednesday. Almost 7,000 calls at the 37 strike gained more and more attention into Tuesday afternoon and traded near $1 in multiple chunks. There was also heavy volume in the 38 calls for 56 cents to 77 cents.

These calls lock in the price investors must pay to buy the department-store company's stock. They can generate some major leverage if the stock rallies but will expire worthless if it doesn't.

Macy's shares rose 0.43% to close at $37. The stock and has been edging near its 100-day moving average, which has been a level of resistance since shares fell below it in late May.

The company faces plenty of competition, though July same-store sales were up about a month ago. Macy's also reiterated full-year guidance.

Calls outnumbered puts by 17,000 to about 11,000, a reflection of the bullish sentiment. Total volume was eight times greater than average.

(Najarian has no positions in M.