Moderately bullish trade boosts Campbell (CPB) put volume

By Karla Yeh,

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Options action out of the gate in Campbell Soup Co. (NYSE: CPB ) indicates one investor expects limited downside in the stock during the next few weeks. CPB shares gained five cents to $37.52 during morning trading on Monday.

At 9:59 a.m. EDT, a block totaling 9,400 September 36 puts changed hands for 15 cents per contract, which was right at the bid price when the volume hit the tape. Current open interest in this line is 106 contracts. This options action suggests an investor was willing to cap maximum profits by selling puts to open on a bet that CPB shares will be trading higher than the strike price of 36 at September options expiration.

If CPB shares do not drop more than 4% during the near term and are trading higher than $36, this put seller could make a maximum of $141,000, or the entire premium collected. If the stock drops below the strike and is trading lower than the breakeven level of $35.85, this put selling will give back some of the credit. If CPB shares drop significantly and are trading below the breakeven level, the investor will lose money as the stock moves closer to zero (maximum loss in the unlikely event that CPB shares are trading at zero at expiration is $35.85 per contract).

It is possible that this investor tied a short stock position to this moderately bullish put trade, but this article focuses only on the options volume on the tape.

CPB did not announce any news today. The company is due to announce earnings figures on Sept. 3 before the market opens. Analysts estimate earnings of 30 cents per contract.

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

This article appears in: Investing Options
Referenced Stocks: CPB

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Karla Yeh

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