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January 10, 2013  Thu 2:45 AM CT

CPB: SEE CHART GET CHAIN FIND STRATEGIES
A trader is betting that Campbell Soup will hold current levels in the next several weeks.

optionMONSTER's tracking systems detected the sale of 2,500 February 35 puts for $0.65 in 18 seconds yesterday. Open interest in the strike was just 179 contracts before the session began, so this is clearly a new position.

These short puts are looking for CPB to close above $35 at expiration in mid-February. If the stock is below this strike price at that time, the trader will face the obligation to buy the stock for an effective price of $34.35 when the credit from the put sale is factored in. (See our Education section)

CPB rose 0.63 percent yesterday to close at $35.21. Shares of the food company have been sliding since hitting $36 as the new year began, but they have held support at the $34.50 level since mid-August.

Yesterday's put trading pushed total option volume in the name to 3,148 contracts, more than 5 times its daily average of 609 for the last month.
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Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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