Green Mountain calls skyrocket

Mike Yamamoto (
June 6, 2014

Keurig Green Mountain saw a wave of late-day call action that drove premiums up more than 2,000 percent as the stock spiked higher this afternoon.

optionMONSTER's Heat Seeker detected heavy buying in the Weekly 120 calls that expire a week from today, which saw more than 12,000 contracts change hands. The calls began trading for $0.25 at 1:37 p.m. ET and continued to rise all the way to an eye-popping $5.70 before pulling back slightly in the final 10 minutes of trade, as optionMONSTER co-founder Pete Najarian noted on CNBC's " Fast Money " program.

GMCR was up 8.39 percent by the close at $122.07 but had risen to $123.38 a few minutes before the bell, about $1 away from its all-time high reached in February. The coffee company's stock was trading at $112.96 when the call buying began, indicating that almost the entire day's gains were made in the last 2 hours of the session.

In the same time, the price of those calls skyrocketed by an astounding 2,180 percent. Long calls lock in the price where a stock can be purchased, allowing traders to cheaply position for gains with the potential for significant leverage--which was precisely the case in Green Mountain today. (See our Education section)

There was no apparent news behind the unusual activity. But short interest in the stock is estimated at more than 12 percent of the float, so a squeeze could have contributed to the moves.

Total volume in GMCR topped 74,000 contracts, more than 14 times its daily average for the last month. Overall calls outnumbered puts by 3 to 1.

Disclosure: Najarian is long GMCR.

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