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Coca-Cola seen holding up in long term

Chris McKhann (chris.mckhann@optionmonster.com)

Coca-Cola is trading just off 14-year highs, and one large player is looking for the stock to hold up in the long term.

KO ended yesterday at $77.14, down fractionally on the session. The beverage giant finished Thursday at $77.44, its highest close since 1998. Shares have been in a fairly steady trend higher from $68 since the middle of January.

The option volume in KO was topped by the action in the January 2014 70 puts. A trader sold 5,000 of those contracts for the bid price of $5.05 against previous open interest of 406, so this was a new position.

The put selling is a bet that KO will hold above the $70 strike price through that longest option expiration now trading. It is also a bet that the stock will be relatively range-bound, because the trader would be using a different strategy if he or she were truly bullish. Finally, the put seller is showing the willingness to buy the stock on a pullback if it is below the strike. (See our Education section)

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