Kellogg slips from highs, draws puts

optionMONSTER

Shares of Kellogg are cooling off after ripping higher in the second half of the year, and one trader is positioning for a potential drop.

optionMONSTER's Depth Charge system detected the purchase of 2,000 January 52.50 puts this morning for $0.09. This a new position, as its volume was well above the strike's open interest of 877 contracts at the beginning of the day.

K is down 0.5 percent to $55.90 this morning. The cereal maker bounced sharply at its 52-week lows near $47 in late July and ran up to its 2012 highs above $57 about two weeks ago, but it has been drifting lower since then.

Today's puts could have been bought by an investor as a hedge to protect gains in a long position, given how far the shares have risen. If not, the trader could be making a cheap bet that the stock will fall more than 6 percent by expiration on Jan. 18. (See our Education section)

The trading made up almost all the 2,080 options that have changed hands in Kellogg so far today. Only 17 calls have traded in the name.


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