This has been a very unusual week over at Kraft Foods Inc. (NYSE: KFT). Interestingly enough, this may be irrelevant from the company’s significant earnings win at the start of the week. We noticed highly unusual options trading at VSinvestor this week and you can see on yesterday’s post just how much the interest has grown. This is also for the current expiration month rather than on farther outlying month expiration dates. If you look below, you’ll see that the activity is continuing this week for the AUGUST contracts:
CALLS Volume OpInt
$35.00 28,828 582,770
$37.50 10,340 27,810
$40.00 15,000 15,000
PUTS Volume OpInt
$35.00 28,791 585,697
$37.50 10,340 48,557
$40.00 15,340 15,340
If you look at the article above you will see how much the openinterest has gone through the roof. 580,000 options contracts represents 58 millionshares on a fully diluted basis.
Some of this options volume is actually non-directional trading that ismeant as a form of arbitrage that was capturing an inefficiency, but bynow you have to bet some of the newer volume is also speculatorsgetting in. This was under $30.00 at the close of last week and thestock now sits at $32.00 mid-day this Friday.
Who knows, maybe traders are betting that Warren Buffett is using someof his Budweiser gains to buy more shares on top of the 9.12% stake healready owns.
Jon C. Ogg
August 1, 2008
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