Dean Foods Gets Bullish Options Bet

By Mike Yamamoto, managing editor of OptionMonster

DALLAS (TheStreet) -- Dean Foods (DF Quote) 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.

The stock fell 1.5% Tuesday 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, at which 3,800 calls traded within two minutes Tueasday 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 the stock rises at least 14.5% by the time the contracts expire on March 19, 2010.

Investment bank Collins Stewart initiated coverage of Dallas-based Dean Foods with a "hold" recommendation last week. In August, the company reported a 31% rise in second-quarter profit, meeting Wall Street's estimates, and raised its full-year outlook. It hasn't yet scheduled its next earnings report.

Total calls traded outnumbered puts by more than 17 to 1.