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Diamond Foods Stock Soars, But Pros Still Wary

Diamond Foods stock soared nearly 53 percent Friday on its statement regarding an internal accounting probe, but the “Fast Money” traders remained cautious.

The San Francisco-based company announced that an investigation into allegations of improper payments to farmers showed no cause for concern. Previously, the Diamond Foods’ $1.5 billion acquisition of potato-chip maker Pringles from Procter & Gamble was delayed while the probe was underway.

“I’m not a buyer here,” said Patty Edwards of Trutina Capital, adding that a better play on the Pringles sale would be on the Proctor & Gamble side.

“I don’t believe that this is actually going to go through, at least at the valuation they were looking at before,” she said.

Shares of Diamond Foods closed up $14.01 at $40.56, a level Edwards noted was 46 percent below when the investigation was announced.

“This is not an area of growth that I’m that interested in playing,” said Zack Karabell of River Twice Capital.

Trader Steve Grasso said options were a better bet.

“I would definitely want to be buying some upside calls,” he said.

Trader J.J. Kinahan said January puts were worth a look because of the stock’s vulnerability.

“You’re risking a lot and bad news could instantly collapse this stock,” he said.

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Trader disclosure: On Dec 9, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders;
Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; Karabell is long AAPL; Karabell is long IBM

For Steve Grasso
Stuart Frankel & Co and it’s partners own CSCO
Stuart Frankel & Co and it’s partners own CUBA
Stuart Frankel & Co and it’s partners own GERN
Stuart Frankel & Co and it’s partners own HPQ
Stuart Frankel & Co and it’s partners own HSP
Stuart Frankel & Co and it’s partners own HSPO
Stuart Frankel & Co and it’s partners own MET
Stuart Frankel & Co and it’s partners own MSFT
Stuart Frankel & Co and it’s partners own MU
Stuart Frankel & Co and it’s partners own NYX
Stuart Frankel & Co and it’s partners own PRST
Stuart Frankel & Co and it’s partners own UAL
Stuart Frankel & Co and it’s partners own XRX

For Zach Karabell
Rivertwice is short XLF
Rivertwice is short Smh
Rivertwice is long DD

For Patty Edwards
Trutina Financial is long APPLE (AAPL)
Trutina Financial is long SPDR GOLD TRUST (GLD)
Trutina Financial is long MICROSOFT (MSFT)
Trutina Financial is long INTEL (INTC)
Trutina Financial is long TEXAS INSTRUMENTS (TXN)
Trutina Financial is long DUPONT (DD)
Trutina Financial is long BERKSHIRE HATHAWAY (BRK)
Trutina Financial is long COSTCO (COST)

For Willie Williams
No disclosures

For Jeff Kilburg
No disclosures

For Greg Zuckerman
No disclosures

For Meyer Shields
No disclosures


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