Options Trading News

August 23, 2013  Fri 12:08 PM CT

One investor is betting that Darling International will live up to its name.

optionMONSTER's Heat Seeker system shows that 2,500 October 20 calls were sold for $1.50 while 2,500 January 22.50 calls were bought for $0.70 seconds later. Volume was below previous open interest in the October strike but above it in the January contracts.

This indicates that an investor is rolling a long-call position forward, taking some profits off the table while staying in the trade at a higher strike. The new calls are looking for DAR to rally above $22.50 by mid-January but could expire worthless if shares remain below that level. (See our Education section)

DAR is up 7.09 percent to $20.69 in afternoon trading after spiking to an all-time high of $22.20 right after the market opened. Darling, which provides cooking-waste recycling and recovery services to the food industry, announced this morning that it was buying the animal-rendering unit of Canadian company Maple Leaf Foods for $613 million.

Shares peaked at $21.35 on Aug. 5 but fell after the company reported second-quarter results a few days later. The stock was down at $15 last November.

Total option volume in DAR is 5,423 so far today, above its full-session average for the last month. Only 67 of those contracts are puts.
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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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