Bulls gobble up gains in $TSN

Bulls who opened upside option positions opened in Tyson Foods (TSN) at the beginning of the month are seeing their bets pay off today.

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity in the name on two consecutive sessions early this month:

–On Nov. 1, 2,400 December $90 calls were purchased for $0.95 to 1.02 above open interest of 8 contracts with shares at $83.52.
–On Nov. 4, 2,000 December $90 calls were bought for $0.90 to $0.95 below open interest but apparently added to volume in the same strike from the Nov. 1 trade, with shares at $82.29.

Those calls are marked for $2.10 this morning, double their original prices. The stock rose as much as 9.5% in that same time period, a significant move but nowhere near that of its options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

TSN is up 0.022% to $90.11 today. The meat producer missed earnings expectations on Nov. 12 but spoke positively about the fiscal 2020 calendar.