Bulls hope to feast on Kraft Foods
Mike Yamamoto | firstname.lastname@example.org
More than 7,000 December 57.50 calls were purchased for $0.85 to and $0.90 today, led by a block 5,670 contracts, according to optionMONSTER's Heat Seeker tracking system. This is fresh buying, as the volume was well above the strike's open interest of 3,493 before the session began.
These long calls lock in the price where traders can buy the stock no matter how far it might rise through mid-December. They could be sold earlier at a profit if premiums gain with a rally before then, but the contracts will expire worthless if shares remain below the $57.50 strike price. (See our Education section)
KRFT is down 1.05 percent to $54.42 this afternoon, just off the session's low after falling all day. The stock had been climbing since bouncing near its 200-day moving average in late August and has been trying to break above its 50-day average since Monday. Shares hit $58.76 on July 22, their highest price since the food company was restructured last October as its snacks business was spun off to create Mondelez.
Today's call buying made up almost all of the 7,900 options that have traded overall in Kraft, which has averaged just 1,663 per session for the last month. Only 122 puts have changed hands, a further indication of the session's bullish sentiment.