IB Options Brief: Green Mountain Coffee Roasters, Inc. (GMCR)

Posted June 11th, 2012 by Caitlin Duffy in Unusual Activity

Green Mountain Shares Anything But Robusta As Stock Slips To Fresh Record Lows

GMCR ñ Green Mountain Coffee Roasters, Inc.
Shares in Green Mountain Coffee Roasters fell as much as 8.95% this morning to a fresh all-time low of $21.06 after grocery chain operator, Kroger Co., said it plans to sell private label coffee pods for Green Mountainís Keurig single-cup brewing machine.

GMCRís patent on the K-cups expires in September. Green Mountainís shares have lost 80.0% of their value since September 2011, when the stock touched an all-time high of $115.98.

Options traders expecting shares in GMCR to extend losses snapped up puts on the Waterbury, Vermont-based coffee company. Short-term bearish bets are building in the June $21 strike put where some 2,500 lots were purchased for an average premium of $0.53 apiece.

Strategists positioning for a more severe pullback in the price of the underlying picked up roughly 2,000 puts at the July $17 strike for an average premium of $0.66 each.

Traders long the $17 strike put stand prepared to profit at expiration next month should shares in Green Mountain tumble 22.4% from todayís low of $22.06 to breach the average breakeven price of $16.34.

Not all of the action in GMCR options is bearish today; some strategists appear to be buying out-of-the-money calls that could pay off if shares in GMCR stage a near-term rebound.

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