Traders turn chicken on Sanderson Farms

By
A A A

Sanderson Farms has been struggling higher all year, but one investor is apparently nervous that those gains may evaporate.

optionMONSTER's Depth Charge tracking system detected the purchase of 2,000 June 45 puts for $1.30 and the sale of an equal number of June 40 puts for $0.30, resulting in a net cost of $1 for the trade.

This bearish put spread will earn a 400 percent profit if the chicken processor closes at or below $40 on expiration. (See our Education section)

SAFM is down 0.59 percent to $47.15 in midday trading. It rallied about 24 percent between January and late March, but the gains have slowed since then. That stands in contrast with many other food companies, which have been gaining momentum in the last month.

Sanderson's last bullish catalyst was an upgrade by Jefferies from "hold" to "buy" on April 20, but sellers have dogged the stock and pushed short interest to 21 percent of the float as of mid-April. Its last earnings report on Feb. 24 missed estimates after feed costs soared and chicken prices fell.

Overall option volume in the name is 12 times greater than average today, with puts outnumbering calls by more than 1,000 to 1.



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

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


This article appears in: Investing , Options

Referenced Stocks: SAFM

optionMONSTER

optionMONSTER

More from optionMONSTER:

Related Videos

Stocks

Referenced

100%

Most Active by Volume

57,428,665
  • $16.78 ▼ 0.24%
31,713,281
  • $4.968 ▲ 3.28%
30,830,989
  • $3.34 ▼ 2.34%
28,259,000
  • $96.92 ▼ 0.30%
26,357,905
  • $99.38 ▲ 0.20%
22,124,411
  • $77.01 ▲ 0.60%
21,512,767
  • $13.25 ▼ 0.38%
20,267,570
  • $14.4653 ▼ 0.85%
As of 10/2/2014, 12:55 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com