Mondelez Traders Expect Bullish Summer

By Mike Yamamoto of OptionMonster

NEW YORK -- Traders are looking for Mondelez (MDLZ) to break out and hit record highs by the end of summer.

OptionMonster's tracking systems detected the purchase of more than 2,600 September 38 calls for $1.09 to $1.15. Volume was well above open interest, which indicates that new money was put to work on the long side.

These long calls lock in the price where the stock can be purchased through mid-September no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will lose value if the shares pull back.

Mondelez rose 0.69% to $37.87 on Tuesday as it continues to trade sideways since a strong earnings report on May 7 drove shares to $38.47. That was the stock's highest price since the snack company, which generates most of its revenue overseas, was spun off from Kraft Foods in late 2012.

Total option volume in the name Tuesday was triple its daily average for the last month. Overall calls outnumbered puts by almost 5 to 1, reflecting the session's bullish sentiment.

Yamamoto has no positions in MDLZ.

 

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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