Bull takes big bite out of Campbell Soup

By David Russell,

Shutterstock photo

Campbell Soup made a sharp move last week, and one investor is positioning for more upside ahead of next week's earnings report.

optionMONSTER's tracking systems detected he purchase of 3,300 May 35 calls for $0.40 and the sale of an equal number of June 36 calls for $0.35. Volume was below open interest in May but not in June, indicating that an existing short position was rolled to the higher strike.

The trade was likely the work of an investor who owns shares in the food company and had sold calls against them. Yesterday's trade cost $0.05 and will earn an additional $1 of upside on the stock. If the calls hadn't been rolled, the trader would have been forced to sell the shares for $35 on Friday.

CPB rose 0.51 percent to $35.28 yesterday and is up 6 percent in the last month. Most of the move appears to have been technical, rather than driven by news, after the shares found support above their 50-day moving average.

The next big event is the release of fiscal third-quarter earnings on Monday morning. The last report on Feb. 18 missed estimates and management cut full-year guidance, but many food companies like Heinz and Dean Foods have started rallying since then.

The call roll pushed total option volume in CPB to 9 times greater than average in yesterday's session.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: CPB

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