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What's behind put buying in Sysco

David Russell (david.russell@optionmonster.com)

Sysco has been limping, and traders are positioning for more potential losses.

optionMONSTER's Depth Charge tracking system detected the purchase of almost 3,200 August 34 puts for $0.80. Volume was almost quadruple the previous open interest at the strike, indicating that new positions were initiated.

Puts lock in the price where shares can be sold in the food distributor, which sells to restaurants, hospitals, and schools. The options will appreciate in value if the stock declines, letting shareholders hedge against a drop , while keeping them in the game for upside if it rallies. (See our Education section)

SYY rose 0.47 percent to $34.32 yesterday. The slow-moving stock touched $35.62 in March, its highest price in 5-1/2 years, but has been making lower highs since. It's also been hitting resistance at its 50-day moving average, which could be lead some chart watchers to look for an acceleration to the downside.

The company hasn't yet announced the schedule for its fourth-quarter results, but they were released on Aug. 13 last year. If that timing holds true this year, it would occur before Monday's contracts expire--so traders may be looking for downside or increased volatility heading into the report.

Total option volume was 8 times greater than average in the session, according to the Depth Charge.



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