Sarah Wasserman (swasserman@sir-inc.com) Option players have flocked to Dean Foods Company (DF) today, with volume of 12,000 contracts changing hands. Puts have comprised virtually all of today's volume, with some 11,000 of these bearishly oriented options crossing the tape -- six times DF's expected single-session put volume of just 1,632 contracts.
The bulk of today's put volume has centered on one strike in particular. Over 9,600 contracts have crossed on the March 8 put -- the majority of which changed hands at the ask price, suggesting that they were likely purchased. What's more, with just 6,200 contracts currently open at this strike, it appears that fresh bearish positions are being added here today. By buying to open the March 8 put, option players are counting on DF to sink beneath the $8 level over the next few months.
Technically speaking, DF is in the midst of a long-term downtrend, with the shares falling swiftly since March 2007. During this time, the stock has been guided steadily lower by its 10-month and 20-month moving averages, which are currently located around $11 and $14, respectively.
Earlier this year, DF seemed to find a technical floor at the $10 level, where it hovered from May until November. However, DF recently backpedaled beneath this round number, and has been trading right around $8 for the past few weeks.
DF is currently perched around $8.08.
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