IB Options Brief: Dean Foods Co. (DF)
DF ñ Dean Foods Co.
Bullish options traders breakfasting on Dean Foods Company calls this morning appear to be gearing up for a substantial near-term rally in the price of the underlying stock. Shares in the distributor of milk and dairy products rose 2.8% in the first half of the session to $8.82.
Investors exchanged more than 5,000 calls at the Oct. $10 strike against previously existing open interest of just 452 calls. It looks like nearly all of the contracts were purchased by one trader for an average premium of $0.15 apiece. The long options prepare the investor to profit should shares in Dean Foods Co. surge 15.1% to exceed the effective breakeven price of $10.15 at expiration next month.
Continued gains in implied volatility on the stock, which currently stands 5.6% higher on the session at 49.33% as of 11:40 am ET, as well as share price appreciation in the weeks ahead, may allow the trader to sell the contracts ahead of expiration at an advantageous price. Premium paid for the bullish position represents maximum potential loss to the investor in the event that shares fail to exceed $10.00 at expiration day. Shares in Dean Foods last closed above $10.15 back on August 3.
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This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this material arenot suitable for all investors. Any opinions expressed herein are givenin good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take into accountyour particular investment objectives, financial situations or needsand is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particular circumstancesand, as necessary, seek professional advice.
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Equity Options Analyst
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