Bears looking to feast on Sara Lee
David Russell | email@example.com
Two days ago our Depth Charge tracking system detected a surge of put buying in the food company, whose brands include Ball Park franks and Hillshire Farm. Today the activity returned in even larger size in the October contracts.
This time, more than 24,000 October 16 puts were bought for $0.20 and an equal number of October 21 calls were sold for $1. There was almost no open interest at either strike before the trade appeared.
SLE is up 0.34 percent to $20.87 in afternoon trading. It climbed to a six-year high above $22 earlier this month but then issued a weak earnings report and has been falling since. Management also said that full-year sales would be at the lower end of its previously announced range.
Today's option trade, known as a collar, was probably the work of an investor who wants to hedge a long position in the shares. He or she is now obligated to sell SLE for $21 if it closes above that level on expiration, locking in a minimum exit price of $16--roughly the same level where the stock bottomed last year. The trader also collected a credit of $0.80. (See our Education section)
It pushed overall option volume is 23 times greater than average so far today.