Markets

Hershey pullback brings out bulls

Hershey Foods has skidded lower, but now the bulls are looking for a rebound.

optionMONSTER's Heat Seeker tracking program detected the purchase of some 2,300 October 95 calls, most of which were priced at $0.60 to $0.67. Volume dwarfed previous open interest of just 81 contracts, which indicates new money was put to work on the long side.

Long calls lock in the price where investors can buy a stock, letting them profit from a rally at limited cost. The contracts can generate significant leverage if shares move in the right direction but can also lose value on a pullback. (See our Education section)

HSY rose 0.4 percent to $91.92 yesterday but has lost 14 percent of its value in the last six months on weak sales. The candy maker is now attempting to bounce around the same $90 level where it paused in the middle of last year, which could make some chart watchers think that it's at support and will continue higher.

Total option volume was triple the daily average, with calls outnumbering puts by 14 to 1.

(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.

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


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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