Dean Foods has been range-bound all year, but at least one trader is making a long-term bet that the dairy and beverage company will rise by next spring.
DF fell 1.48 percent yesterday to close at $18.61. The stock had rebounded sharply from its 52-week low of $11.30 back in November 2008 but has largely traded sideways since the beginning of the year, mostly between about $17.50 and $21.50.
OptionMonster's real-time systems detected heavy activity at the March 20 contracts, where nearly 3,800 calls traded within 2 minutes yesterday morning. Open interest is just 44 contracts at the strike, which boasts a grand total of 1 call in average volume for an entire session.
Nearly all the calls were bought at the asking price of $1.30 and $1.35. These options will profit only if Dean's stock rises at least 14.5 percent by the time the contracts expire on March 19 next year.
Investment bank Collins Stewart initiated coverage of DF with a "hold" recommendation last week. On Aug. 5 the company reported a 31 percent rise in second-quarter profit, meeting Wall Street's estimates, and raised its full-year outlook. It has not yet scheduled its next earnings report.
Total calls traded outnumbered puts by more than 17 to 1.
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Mike Yamamoto is an analyst and writer for OptionMonster.