By David Russell of OptionMonster
New YORK -- Hershey Foods (HSY) has skidded lower but now the bulls are looking for a rebound.
OptionMonster's tracking programs detected the purchase of some 2,300 October 95 calls, most of which were priced at 60 cents to 67 cents. Volume dwarfed previous open interest of just 81 contracts, which indicates that new money was put to work.
Such long calls lock in the price where investors can buy a stock, letting them profit from a rally at limited cost. The contracts can generate significant leverage if shares move in the right direction but can also lose value on a pullback.
Hershey shares rose 0.4% to $91.92 on Tuesday but have lost 14% of their value in the last six months on weak sales. The candy maker is now attempting to bounce around the same $90 level where it paused in the middle of last year, which could make some chart watchers think that it's at support and will continue higher.
Total option volume in the name was triple its daily average, with calls outnumbering puts by 14 to 1.
Russell has no positions in HSY.