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Fast trades pay off in Mondelez

By: optionMONSTER
Posted: 1/17/2014 6:16:00 AM
Referenced Stocks: MDLZ

Mondelez has been powering higher, and yesterday the fast money piled into the snack-food company.

Barely half an hour after the opening bell yesterday, optionMONSTER's Heat Seeker scanning system detected heavy buying in the Weekly 36 calls that expire next Friday, Jan. 24. The largest block of 20,000 contracts priced for $0.27.

These l ong calls lock in the price where shares can be purchased, letting investors cheaply control a move to the upside. Given the short time until expiration, yesterday's traders were clearly looking for a quick move. (See our Education section)

And they got it: The stock pushed higher, and those calls would trade for as much as $0.93 by early afternoon--a profit of 244 percent in less than three hours. More than 44,000 of the contracts eventually changed hands with no previous open interest, so they are all new positions.

MDLZ ended the session unchanged at $35.70. The company, part of the old Kraft conglomerate, reports earnings on Feb. 12. Its brands include Chips Ahoy, Cadbury, and Cheese Nips.

Overall option volume was 14 times greater than average in the session, with calls accounting for a bullish 92 percent of the total.

(A version of this post appeared on InsideOptions Pro yesterday.)