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This has been a very busy morning with the deal-related moves in H.J. Heinz (HNZ) (20%) and Constellation Brands (STZ) (34%) providing excitement for many traders despite the relatively flat overall market (SPY near unchanged).

Bullish flow, defined as unusually heavy opening out-of-the-money call buying was noted in the several stocks.

Iridium Communications (IRDM) shares are trading just below $7 and buyers are paying $0.15 for March 7.5 calls on this satellite phone company. One thousand have traded so far, and OI is only 342 so they appear to open, and with earnings at month end, the buyer may be looking for a break higher around that time. The 52-week range is $5.60 to $9.63.

Advance Auto Parts (AAP) saw March 85 call buyers for $0.50. We saw a March 80-85 call spread buyer last week, and today's buyer may be closing the short leg of that spread.

General Mills (GIS) April 45 and February 44 calls are both seeing buyers today, with the current put:call ratio near 0.05 (20 calls per put) as shares lift 2.3%, possibly helped by the jump in HNZ.

SBA Communications (SBAC), the wireless infrastructure company, saw call open interest grow by 8143 calls (and zero puts) after a buyer on Wednesday paid $0.45.

Honorable mention goes to HNZ, and while hindsight is 20-20, our bullish scan from yesterday for S&P 500 component stocks ranked HNZ seventh on the list. We were not involved, but a buyer of about 2200 June 65 calls at midday for $0.35 (when shares were near $60.80) is looking at a 20-fold gain this morning.

HNZ 5 Minute Contract Volume
Source: Trade Alert


HNZ Unusual Call Volume
Source: Trade Alert

We are seeing defensive put buying ahead of earnings in the engineering firm KBR (KBR) today. Earnings are next week and nearly 9000 March 25 puts have traded today, most for $0.10. The buyer may be protecting gains since shares are up nearly $5 since November, but it's one to keep an eye on.


Option Dashboard
Source: Trade Alert

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At the time of publication, Henry Schwartz held no positions in the stocks or issues mentioned.