Options Trading News

December 18, 2012  Tue 10:34 AM CT

A unusual long-term play is bullish on Coca-Cola.

optionMONSTER systems show that a trader sold 3,000 January 2014 35 calls for $3.52 against open interest of more than 19,000 contracts. At the same time, the trader bought 6,000 January 2015 32.5 calls for $5.91 in volume that dwarfed open interest of 821 at that strike, clearly a new position.

This could be a new diagonal call spread, with the sale of the nearer-term calls to help offset some of the cost of the longer-term calls. Or this could be rolling a long-call position lower to the later-dated contracts in response to the stock's recent declines.

KO is flat on the day at $37.50. The beverage giant was above $40 into early August but has lost ground in the last few months.
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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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