One investor is using options to manage a highly conservative
trade in General Mills.
Our tracking systems detected the sale of about 2,600 April 40
calls for $1.12 and the purchase of roughly the same number of
January 40 calls for $0.72. Volume was below open interest in the
January strike but not the April options, which suggests that an
existing short position was rolled from one contract to the other.
The investor probably owns shares in the slow-moving food maker,
whose brands include Cheerios, Green Giant, and Progresso. Selling
calls against the stock generates income, which reduces the
downside risk of the overall position. The trader can also continue
receiving its 3.4 percent dividend yield.
Yesterday's transaction paid a credit of $0.40. In return for that
money, the investor agreed to sell the shares for $40 through early
next year. (See the discussion of
GIS rose 0.85 percent to $39.32 yesterday. More than 12,600 option
contracts traded overall, compared with 3,600 in an average
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.
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