The long calls lock in the purchase price that investors must pay to buy shares of the company, which is best known for its Bubble Wrap packaging material. The option premiums could double or triple if Sealed Air rises 10 percent to 15 percent, but the contracts would expire worthless if the stock fails to move.
Sealed Air shares rose 2.16 percent to $17.99 yesterday. The stock lost about a quarter of its value between May and August, but has been consolidating since then. This week it managed to find support above its 100-day moving average, which some investors may consider a bullish sign.
The company's next earnings report is scheduled for the morning of Feb. 9. Its total option volume was 14 times greater than average yesterday, with calls outnumbering puts by 34 to 1.
—Russell has no positions in SEE.
Additional News: Sealed Air to Cut Jobs, Consolidate Facilities
Additional Views: Jefferies Cuts Sealed Air Price Target
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David Russell is a reporter and writer for OptionMonster.