Options Trading News

January 3, 2013  Thu 3:47 AM CT

At least one investor is cutting the cord in Dole Foods after the fruit company issued weak preliminary results.

optionMONSTER's Depth Charge tracking program detected the purchase of 7,500 April 9 puts for $0.50 and the sale of an equal number of April 10 calls for $0.92. Volume exceeded open interest at both strikes, indicating that new positions were opened.

The transactions occurred in two separate blocks almost one hour apart, so it's not clear whether they were the work of a single or multiple investors. Regardless, the positions resulted in a credit of $0.42 and are bearish.

The trades ensure a minimum selling price of $9 while obligating shares to be sold for $10 if they go above that level. Including the credit earned the minimum price received would be $9.42 and the maximum would be $10.42.

The options are probably being used to protect long positions in the name. (See our discussion of collars)

DOLE fell 13 percent to $9.93 yesterday and is down 28 percent in the last three months. Yesterday's decline came after the company forecast 2013 EBITDA of $150 million to $170 million because of weak pricing and increased banana competition. Some analysts had expected EBITDA of more than $200 million.

Total option volume was 49 times greater than average in the stock, according to the Depth Charge.
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