An Options Play On Coca-Cola

The Coca-Cola Company [NYSE: KO, $42.11] produces and markets over 500 beverage products internationally.  The company is headquartered in Atlanta, Georgia, and is currently led by CEO & Chairman Muhtar Kent.

Although nearly flat in 2015 (down less than a quarter percent), KO stock has long been a favorite of investors looking for steady returns and a healthy dividend stream.  The stock is up 11% over the past year and over 50% over the past five years.

Beginning last Friday, we have seen quite a few “unusual” orders in KO options markets, with large, upside-call buyers coming in and lifting the offer.  Early in this morning’s session, we saw a trader buy 13,914 KO May 44 Calls for $0.50 – seven times the average call volume regularly traded.  If in-the-money at expiration, these options will control nearly 1.4 million shares of stock.  This morning’s order also represents an outlay of $695,700 in long premium. 

My Trade

  • Buy the KO May 44 Calls for $0.55
  • Risk: $55 Per 1 Lot
  • Reward: Potentially Unlimited
  • Break-even stock price at expiration: $44.55

Greeks of this Trade

  • Delta: Long
  • Gamma: Long
  • Theta: Short
  • Vega: Long

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