OptionsHouse

Options Trading News

October 5, 2012  Fri 11:36 AM CT

KRFT: SEE CHART GET CHAIN FIND STRATEGIES
Call selling tops the action in Kraft Foods as it adds to gains today.

KRFT trades at $47.37 today, up 1.59 percent in its fourth session since being spun off. It opened at $44.44 on Tuesday and hit an intraday high of $47.76 the next day after "erroneous" trades that went as high as $58.54 were canceled.

A trader sold 8,174 March 47.50 calls for $1.55, according to optionMONSTER's systems. That volume dwarfed the open interest of just 37 contracts in the strike at the beginning of the day, so it is a new position.

The calls may have been sold naked in a trade that has an initial bearish bias. However, given how close the stock is to the $47.50 strike price, it is far more likely that the calls were traded against an existing long position in the stock.

The latter strategy would be based on the thesis that KRFT doesn't gain much for the next several months. The maximum profit would come with shares at or above the strike, but the position gives up any gains beyond that. (See our Education section)
Share this article with your friends


Related Stories

KRFT

Cramer: Taking fluff out of market

March 26, 2015

You know when the selling will be over? When biotech stops taking us down and then tech, particularly the semis, stop going down. Let them tell us what to do.

Invest Like a Monster - San Diego: June 26-27

Premium Services

Archived Webinar

Education & Strategy

Short Gamma

Last week, we talked about long Gamma. We said that long gamma is acquired by purchasing options and when you...

View more education articles »