One big investor seems to think that Pilgrim's Pride is about to get humbled.
optionMONSTER's tracking systems detected the sale of about 2,600 March 5 calls for $1.60 against open interest of 1,945 contracts. The trade obligates the investor to sell shares in the chicken processor for $5.
That translates into a price of $6.60 including the credit earned. PPC rose 2.48 percent to $6.21 yesterday.
The investor is probably using the options to manage a long stock position in a covered call strategy. It enabled them to lock in an exit price above the current level in return to staying in the position until the spring.
The trade also protects against a drop because the investor is now entitled to receive that price as long as PPC stays above $5--more than 20 percent below yesterday's close. (See our Education section)
The call selling also follows a rally of more than 70 percent in the last three months, which could be leading some investors to believe that PPC needs to pause.
Option volume was 7 times greater than average in the session.
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