Green Mountain Coffee Roasters is near three-year lows, and one trader sees limited upside potential in the short term.
GMCR is down 0.13 percent this morning at $23.28 after trading above $33 three weeks ago, its highest level since gapping lower at the start of May. The specialty-coffee producer fell to $17.11 in late July, its lowest level since July 2009. Shares were above $96 at their 52-week highs last October.
A trader sold 4,497 October 27 calls for the bid price of $0.41, according to optionMONSTER's systems. The volume was about twice the open interest, so this was a new position.
The call selling is a bet that GMCR won't be above $27 in the next 17 days. These may have been sold naked with an initial bearish bias or traded against long shares in a covered call position. The latter strategy would be bullish up to the strike price, where the maximum gain is realized, but not beyond. (See our Education section)
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GMCR
Green Mountain sees downside play
May 3, 2013
A bearish strategy led yesterday's option activity in the coffee company, which has been in a reasonably tight range for the last six weeks.
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