Always on the prowl for options activity, Jon Najarian has spotted some interesting action in Sara Lee and two other stocks.
“Nobody doesn’t like Sara Lee,” Najarian tells us with a wink and a grin. The option Monster has spotted an unusual amount of volume in the Sara Lee July 20 calls.
Considering that’s a bet on upside activity 6 months from now – a lifetime and a half for Najarian who moves in and out of positions with the dexterity of a Persian cat - we asked him why the activity was noteworthy.
“I think this is simply a bet on an improving economy,” he replies. "A trade up."
In other words, Najarian interprets action as a bet that frugal shoppers, who have been buying store brands, will treat themselves and instead buy higher priced name brands, such as Sara Lee pies, Hillshire Farms meats etc.
If Najarian's right, that's a trend that has a slew of implications and can inform your trades in many, many ways.
The Option Monster keyed into KB Homes stock after noticing strong interest in the April 9 calls.
Najarian thinks the action is a response to Bernanke’s white paper.
(On Wednesday, Federal Reserve Chairman Ben Bernanke wrote a so-called ‘white paper’ in which he said foreclosed properties should be converted into rental units.)
That's a positive development for the housing market, broadly, Najarian tells us. Back in November Najarian told us he expected the housing market to bottom. Click here to check out that post.
Najarian says his heat seeker has identified big call buying in the Feb 15 strike in Inhibitex .
Najarian tells us this may simply be a bet that Inhibitex is about to draw a great deal of investor interest as the JPMorgan Health Care conference gets underway next week. The event is sometimes called the Super Bowl of Health Care conferences with more than 400 companies attending.
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Trader disclosure: On Jan 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova owns APC; Terranova owns OXY; Terranova owns XOM; Terranova owns VRTS; Terranova owns IBM; Terranova owns CSCO; Terranova owns AXP; Terranova owns SBUX; Terranova owns CSX; Terranova owns SWN; Terranova owns AXP; J. Najarian owns AAPL; J. Najarian owns AKS; J. Najarian owns BAC; J. Najarian owns PNC; J. Najarian owns GS; J. Najarian owns NFLX; J. Najarian owns MSFT; J. Najarian owns AA; P. Najarian is long AAPL; P. Najarian is long C; P. Najarian is long JPM calls; P. Najarian is long WFC calls; P. Najarian is long NFLX calls; P. Najarian is long MSFT ; P. Najarian is long INTC; P. Najarian is long YHOO; P. Najarian is long INTC; Weiss is long EUO; Weiss is short FXA; 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; Weiss is long EUO; Weiss is short FXA
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