Coca-Cola Call-Buyer: Options

By Jud Pyle, CFA, chief investment strategist for the Options News Network

CHICAGO (TheStreet) -- Shares of Coca-Cola Enterprises (CCE Quote) have rallied more than 100% since its March lows, and we saw at least one investor call even more upside in the beverages company during trading today.

Looking at the in-the-money Jan. 2010 20 calls, more than 6,000 of these options hit the tape so far today, with the stock trading at $20.27 a share. These calls are home to current open interest of 1,158 contracts today, indicating that customers traded these options to open. During afternoon trading, an investor bought these calls for $1.60 per contract, according to ONN.tv's Sidewinder report. That means the breakeven for this call purchase is $21.60.

The Jan. 20 calls are currently trading up 15 cents on the day and have a delta of 56, meaning for every dollar move in the stock, the calls will move by 56 cents. CCE stock is currently up 17 cents, and the calls should have climbed roughly 9 cents so far today. The presence of call-buyers in CCE today has pushed implied volatility up to 30.9.

Keep in mind investors do not necessarily have to hold on to these calls until January expiration to make money. If CCE shares pop significantly during the next five months, take the opportunity to sell the calls and take profit!

On the other hand, the action we're seeing in CCE could be a stock replacement strategy in which an investor is selling shares, but buying the calls in case there is further upside. The call purchase could have less downside than owning the stock outright.

Jud Pyle is the chief investment strategist for Options News Network and the portfolio manager of TheStreet.com Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for TheStreet.com.

-- Written by Judd Pyle in Chicago