Options Trading News

November 29, 2011  Tue 3:20 AM CT

The bulls are hungry for Krispy Kreme Doughnuts before its earnings report tomorrow.

optionMONSTER's Heat Seeker monitoring system detected the purchase of more than 5,000 December 7.50 calls for $0.15 to $0.35 against open interest of 1,330 contracts. Premiums rose as the trades crossed despite the share price barely moving between the prints, which reflects strong buying interest in the calls.

Those long calls lock in an entry price for shares and are heavily leveraged to upside in the stock. They could easily double or triple from even a modest rally following the release of quarterly results after the bell tomorrow. (See our Education section)

KKD ended yesterday's session at $6.81, up 7.75 percent. The doughnut and coffee company has been trending higher since early 2009, fluctuating violently but making consistently higher lows along the way. It's been paying down debt and raising prices, which has helped produce strong financials for the last two quarterly reports.

Overall option volume was 11 times greater than average in yesterday's session, with calls outnumbering puts by 165 to 1, according to the Heat Seeker.

(A version of this post appeared on InsideOptions yesterday.)
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