Monsanto’s (MON) stock option volume went into orbit yesterday and its stock price was down 6% as well. Monsanto’s call option and put option both went berserk yesterday.
If you’re in the farming business, Monsanto is your best friend. Monsanto provides agricultural products for farmers on a global basis. Some of Monsanto’s leading brands include: Accleron TM, Asgrow®, DEKALB®, Deltapine®,De Ruiter Seeds, GenuityTM, Roundup®, Roundup Ready®, Seminis®, VistiveTM, YieldGard®, and YieldGard VTTM.
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There was some news yesterday for Monsanto related to a new long-term supply contract with Air Products (APD). Basically Monsanto will used steam from Air Product’s SMR (Steam Methane Reformer) process for its Roundup production plant. While this is interesting news, it doesn’t really justify the inordinate amount of stock option volume observed for Monsanto yesterday.
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Monsanto also announced that it has reached a milestone with Solae for the development of foods containing the first SDA (stearidonic acid) omega-3 soybean oil product. This sounds real cool, but not earth shattering.
Maybe Monsanto’s stock option volume is related to an upcoming acquisition? But the only other company with significant volume remotely related to Monsanto was Chiquita Brands (CQB) which had significant stock options volume in the January 2012 7.50 put options. Could it be that Monsanto’s about to acquire a private company or a company that doesn’t have stock options, but that probably wouldn’t cause a significant amount of stock options volume. Monsanto’s next earnings report isn’t until January 6, 2010, so that shouldn’t be causing November and December stock options activity.
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Monsanto’s stock price has been in a trading range from $65 to $95 over the last year and is well off of it’s two-year high in the $140 range.
Monsanto’s large stock option volume yesterday is quite a mystery. Monsanto’s Strike of Pain for November, December and January is bullish with values of 75, 75 and 85. The Strike of Pain represents the strike where the stock options buyers will lose the most money and the stock options sellers will gain the most money at expiration.
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Something is up with Monsanto and it has a bullish scent. Besides, Monsanto is a very good company and with a dividend yield of 1.4%. A covered call investing position for Monsanto looks interesting with a potential return of 2.5% and with realization of the return in only 25 days. The call option to sell would be the November 70 with ticker symbol MONKN.
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To enter the covered call investing position an investor would purchase the stocks in multiples of 100 shares for their trading portfolio and sell one call option for each 100 shares of stock purchased for their personal stock portfolio.
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[tags] Accleron, Asgrow, DEKALB, Deltapine, De Ruiter Seeds, Genuity, Roundup, Roundup Ready, Seminis, Vistive, YieldGard, YieldGard VT, SMR, Steam Methane Reformer, Solae, stearidonic acid, omega-3, soybean oil, Strike of Pain, APD, Air Products & Chemicals Inc., CQB, Chiquita Brands Intl. Inc., MON, Monsanto Co. [/tags]