Pinnacle Foods has rebounded since losing its CEO last month, and one large trade is betting that the uptrend will continue.
optionMONSTER's tracking program detected the purchase of 3,000 May 50 calls for $0.40 yesterday. This is clearly a new position, as open interest was only 1,001 contracts before the trade occurred.
Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)
PF fell 0.9 percent to $44.96 yesterday but is up 7 percent in the last three months. The food company has been regaining ground since gapping down on March 23 when its CEO left to take the helm of Keurig Green Mountain Coffee. Pinnacle's next earnings report is estimated for release on April 28.
Overall option volume was 5 times greater than average in PF yesterday. Calls outnumbered puts by a bullish 4-to-1 ratio.
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