TSN – Tyson Foods, Inc. – Call options on the food products company are a hot commodity this morning for bullish players positioning for a near-term rally in the price of the underlying shares. Tyson Foods’ shares rallied as much as 1.7% at the start of the session to an intraday high of $16.31. Shares of the producer and distributor of chicken, beef, pork, prepared foods and other products are perhaps higher following an upgrade to Ba2 from Ba3 by ratings agency, Moody’s Investors Service, on Thursday. Moody’s also lifted Tyson’s outlook to ‘positive’ from ‘stable’, citing continuing debt reduction for the food firm. Optimistic options investors breakfasted on call options, buying up roughly 5,600 calls at the September $17 strike for an average premium of $0.16 each. Call buyers at this strike are prepared to make money should Tyson’s shares surge 5.2% over today’s high of $16.31 to surpass the average breakeven price of $17.16 by September expiration. Bullish sentiment spread to the October $17.5 strike where traders purchased some 2,100 calls at an average premium of $0.33 apiece. These traders are poised to profit if TSN shares jump 9.3% to trade above the breakeven point to the upside at $17.83 ahead of expiration day in October. Increased investor demand for calls helped fuel a 20.4% hike in the stock’s overall reading of options implied volatility to 37.73% as of 11:00 am ET.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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