Options Trading News

December 31, 2013  Tue 3:47 AM CT

A large trade apparently believes that Kraft Foods will continue to hold multi-month support levels through its next earnings report.

optionMONSTER's tracking systems detected the sale of 2,586 February 52.50 puts in two blocks of equal size for $0.85 and $0.80. This is clearly a new position, as the strike's open interest was just 120 contracts before the trade appeared.

The put seller will keep the credit as profit if KRFT remains above $52.50 through mid-February. If it falls below that strike price, the trader will be on the hook to buy shares at that level. (See our Education section)

The packaged-foods and beverage company is scheduled to report fourth-quarter results on Feb. 13, about a week before that month's options expire.

KRFT rose 0.44 percent yesterday to close at $53.94, just above its 200-day moving average and right in the middle of its recent range. Shares have been trading between $52 and $56 since August.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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