Volume Spike Investor

We are still seeing high options trading in Kraft Foods Inc. (NYSE: KFT).  We’d ask traders to pay close attention to these today even though these were yesterday’s most active contracts yet again.  The initial trade was a directionless trade meant to capture some spread arbitrage but now it is obvious that speculators have also started jumping in now that Kraft stock is up about 10% in just 7 trading sessions since this trend started.  Below is the AUGUST 2008 option matrix for the most active strikes broken down by Call/Put, options volume, and the prior open interest.

OPTION (STRIKE)             8-05        OpInt
AUG08 $35.00 CALLS    179,560   579,365
AUG08 $37.50 CALLS    61,389    208,434
AUG08 $40.00 CALLS    257,962  273,812
AUG08 $35.00 PUTS      179,511  576,381
AUG08 $37.50 PUTS      5,000      178,535
AUG08 $40.00 PUTS      5,011      245,879

The reason these are so critical is that the options are set to expire in less than ten days on Friday, August 15, 2008.

Jon C. Ogg
August 6, 2008