Markets

Call buyers are hungry for Kellogg

Traders are looking for Kellogg to break out of a narrow range in coming weeks.

optionMONSTER's Heat Seeker system detected the purchase of more than 5,000 February 62.50 calls, most of which priced for $0.35 to $0.45. The volume was 9 times the previous open interest in the strike, indicating that new money was put to work.

These long calls lock in the price where the stock can be purchased, letting the buyers cheaply position for a rally. The cereal maker's next earnings report is tentatively scheduled for Feb. 6, before those contracts expire, so the traders are probably looking for a strong report. (See our Education section)

K rose 0.41 percent to $61.01 yesterday, rebounding from small losses after the options hit. The stock has traded mostly between $60 and $62 since the start of December.

Total option volume in the name was 12 times greater than average in the session. Overall calls outnumbered puts by a bullish 15-to-1 ratio.

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

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

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

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