Option traders are looking for Kellogg (K) to break out of a narrow range in coming weeks.
OptionMonster's tracking systems detected the purchase of more than 5,000 February 62.50 calls, most of which priced for 35 cents to 45 cents. The volume was nine times the previous open interest in the strike, indicating that new money was put to work.
These calls lock in the price where the stock can be purchased, letting the buyers cheaply position for a rally. The cereal maker's next earnings report is tentatively scheduled for Feb. 6, before those contracts expire, so the traders are probably looking for a strong report.
Kellogg's shares rose 0.41% to $61.01 on Wednesday, rebounding from small losses after the options hit. The stock has traded mostly between $60 and $62 since the start of December.
Total option volume in the name was 12 times greater than average in the session. Overall calls outnumbered puts by a bullish 15-to-1 ratio.