This is a sign that portfolio managers are concerned about downside risks and paying a premium for portfolio protection.

Fred Ruffy

Categorized in : Company News

I think some of these are institutional people positioning to play this as part of a risk arbitrage if the deal moves forward.

Participants are bracing for a bit more volatility than in past q... by Fred Ruffy

Participants are bracing for a bit more volatility than in past quarters.

It will probably see some interest due to the volatility and the... by Fred Ruffy

It will probably see some interest due to the volatility and the new listing.

Since most of the open interest is in the May term, it is probably related to the drug study results later this month.

It might be nothing more than lucky timing. On the other hand, news of the deal might have been leaked and motivated the call buying in Kraft.

Overall, call buying seems to be driving a lot of the order flow in both names as players in the options market take positions in anticipation of additional upside for shares in the days/weeks ahead.

The stock suffered such a big sell-off that the logic might be: 'Well, if it recovers even 20 percent of the losses, that translates to a substantial move higher from current levels,'.