Last week, Dean Foods (DF) issued a special $15 per share dividend to stockholders. Following the dividend, the stock dropped about $15. It is typical for a stock to drop the amount of the dividend. However, the stock gained close to 8% since last week.
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Dean Foods is in the middle of a three-year plan to increase productivity and build its brands. Stephens Inc. analyst Farha Aslam, was quoted in an AP article as calling the move “unusual” but fitting with Dean Foods strategic plan. She went on to say, “Some investors are reinvesting their dividend back into the stock. There were investors that were seeking to buy the shares but did not want to have the tax liability of the dividend and are buying the stock today.”
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This article assumes Dean Foods will do well because of solid fundamentals (a 2.57 price to book ratio, a reasonable 22 P/E, and an EPS of 1.61) and its price resilience after the dividend. However, this might not be the case. This is just to show you, the investor, how PowerOptions will allow you to make more informed decisions (and potentially more profitable decisions) about trading positions you develop.
Profile:
Dean Foods is a food and beverage company in the United States. It operates a Dairy Group and WhiteWave Foods Company. The Dairy Group segment manufactures and distributes various products including half-and-half, whipping cream, dairy coffee creamers, ice cream, yogurt, cottage cheese, sour cream, and eggs. The WhiteWave Foods Company segment produces various branded soy, dairy, and dairy-related products, such as Silk soymilk and Horizon Organic dairy products. The company was founded in 1925. It was formerly known as Suiza Foods Corporation and changed its name to Dean Foods Company in 2001. Dean Foods is headquartered in Dallas, Texas.
Potential Trades:
Below we take a look at Dean Foods May Covered Calls and one other trade in the dairy and farm sector. Taking a broader view may help an investor identify other compelling trades in the sector. All of the following option trades have 61 days until expiration. These trades were discovered using the powerful suite of option search tools found at PowerOptions.
| PowerOptions covered call search (61 days) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
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| DF | $36.27 | DFFG | 07 JUN $35.00 | $2.20 | 6.10% | 2.70% | 6.70% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FDP | $19.74 | FDPFD | 07 JUN $20.00 | $0.80 | 4.10% | 4.20% | 5.60% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DF – Dean Foods. This trade involves the June $35.00 call option and offers 6.1% downside protection and 6.7% potential profit if the stock is above the $35.00 strike price at the end of the option period. The stock is currently trading at $36.27.
FDP – Fresh Del Monte Produce, Inc. and its subsidiaries engage in the production, transportation, distribution, and marketing of fresh and fresh-cut fruit and vegetables worldwide. This trade involves the June $20 call option and offers 4.1% downside protection and 5.6% potential profit if the stock is above the $20 strike price at the end of the option period. The stock is currently trading at $19.74.
Competitors:
Competitors for DF include: ConAgra Foods Inc. (CAG), Kraft Foods Inc. (KFT), and Land O’Lakes, Inc. (private).
Competitors for FDP include: Chiquita Brands International Inc. (CQB), Dole Food Company, Inc. (private), and Fyffes plc (private).
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
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PowerOptions‘ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, naked puts and iron condor stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.
[tags] Farha Aslam, AP, WhiteWave Foods, Horizon Organic, Suiza Foods, Dallas, Texas, Land O’Lakes, Inc., Dole Food Company, Inc., Fyffes plc, CAG, ConAgra Inc., CQB, Chiquita Brands Intl. Inc., DF, Dean Foods Co., KFT, Kraft Foods Inc., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]