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The shares of Krispy Kreme Doughnuts (KKD - 6.71) have followed the broader equities market into the black, after the firm named former FedEx (FDX) executive Kenneth May its new president and COO. In light of the news -- and ahead of the firm's turn in the earnings spotlight on Wednesday -- it looks like more than a few options speculators are rolling the dice on an extended uptrend for the stock.
Around midday, the breakfast behemoth has seen more than 4,100 calls change hands -- about seven times its average daily call volume. For comparison, just three KKD puts have crossed the tape so far today.
Most popular by a mile has been the equity's out-of-the-money December 7.50 call, which has accounted for about 3,700 of the contracts traded. With fewer than 1,350 calls currently docked at the front-month strike, and considering the majority of the calls crossed at the ask price, we can assume that a healthy portion of today's volume consists of buy-to-open activity. By purchasing the 7.50-strike calls to open, the buyers are hoping KKD muscles atop the $7.50 level before December-dated options expire.
From a wider sentiment perspective, today's affinity for calls is just more of the same for KKD. The security's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 44.26 -- in the 84th percentile of its annual range. Or, simply put, options traders have bought to open KKD calls over puts at an accelerated clip during the past couple of weeks.
However, there's still plenty of room on KKD's bearish bandwagon. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.31 stands just six percentage points shy of an annual peak. In other words, the short-term options crowd has rarely been more put-heavy on KKD during the past year.
At last look, KKD has tacked on 6.2% to wink at the $6.71 level.