Unusual Options Activity Alert: Hershey Company (HSY)
Hershey Company (HSY) Infected With Takeover Hype
Options volume in Hershey (HSY) surged on Tuesday. Theaction started early and was mentioned on Trade-Alert at 14:17 Eastern Time.At that time the stock was $1.46 to $37.97 a share and there was obvious speculativebuying in the June and July 40 calls. The action continued into the close.
At the end of the day, the stock was trading for almost $40a share. A total of 54,000 calls had traded on the day, or almost ten timesthe number of calls.
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The reason for all the fuss wasnít immediately clear. Therewas some vague chatter that Nestle might be eyeing HSY. The origins of the talkappeared to stem from a research note that weighed the strategic alternativesfor Nestle, Kraft and Hershey.
Yet, I was able to get a peek at this note and itwas far from bullish on Hershey. In fact, the analyst actually notes, ìWeconsider it highly unlikely that anybody, especially Cadbury, will want or beable to acquire Hershey.î
Wednesday morning, HSY is trading down $1.00 to $38.93. Lookingat the open interest numbers suggests that a lot of yesterdayís action was veryshort-term in nature. For example, the June 40s, which saw almost 10,000contracts traded yesterday, also saw a modest increase of open interest of roughly2,200 contracts.
A total of 26,600 of the July 40 calls traded, but openinterest in that contract is now 8,665 contracts. A lot of these trades appearto be opened and closed during the same trading session. In short, whileanything is possible, the buzz in HSY yesterday seems more likely to be nothingmore than short-term hype.
Posted By: Trade Alert
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