Bearish Option Activity Alert: HNZ

Bearish Option Activity Alert: HNZ

H.J. Heinz Co. (HNZ) sees a Bearish Put spread open today with an investor buying the December 50-55 Put spread on a 3-1 ratio 6,000 by 2,000 times. A net debit of $.625/spread was paid for this strategy that reaps maximum profits if HNZís shares settle at $50, or 5.9 % lower from todayís price, at December expiration. The volume from todayís spread has helped push total contract volume to more than 6 times the companyís daily average.

Heinzís shares have rewarded its holders nicely during the month of October, climbing more than 10% from their monthly low on October 4th. The stock is currently bumping up against its short term resistance level of $53.40 so it looks todayís option activity is someone banking on this technical level to hold and betting on a pullback in the shares over the next two months. The company is slated to release its Q2 earnings on November 18th.

About Patrick (Rick) Mortimer

Patrick(Rick)Mortimer is the Director of Options Trading at Pipeline Trading Systems LLC. With over 25 years of options trading experience as a Broker/Market Maker on the Philadelphia Stock Exchange he now provides daily insight into today’s complicated world of equity options trading. His daily alerts and commentary are valued by institutional asset managers and hedge funds and he is often quoted by well known financial news providers such as Bloomberg, CNBC, and Reuters. Pipeline’s equity and options clients have found his analysis useful in providing option strategy’s to increase alpha for current equity holdings as well as forecasting directional stock movement based on the underlying option activity.