Put seller sees floor beneath Coca-Cola
Chris McKhann | firstname.lastname@example.org
KO fell.39 percent yesterday to close at $76.57, its second consecutive session in negative territory. But it is still within $1 of Friday's $77.47 close, the highest since its all-time peak in 1998. The beverage giant has been trending higher from support at $67 at the end of January.
More than 42,000 KO options changed hands yesterday, more than twice its daily average in the last month. Topping that action was one print in the January 2014 67.50 puts.
A trader sold 12,250 of those puts for the bid price $4.15, according to optionMONSTER's systems. Open interest at the strike was 1,049 contracts at the beginning of the day, so this is a new position.
The put seller is looking for KO to remain above $67.50 in the long term. If that holds true through expiration, the credit of $4.15 will be kept as profit. That represents a 5.4 percent return but is very likely leveraged for greater profit.
The trader is also showing the willingness to buy 1,225,000 KO shares if the stock is below the strike price. (See our Education section)