What Options Traders Expect for Conagra Stock Ahead of Earnings

One trader is betting big on the January 2023 30-strike put

Digital Content Manager
Oct 5, 2022 at 12:17 PM
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Food producer Conagra Brand Inc (NYSE:CAG) is getting ready to kick off another earnings season, with its third-quarter report due out before the open tomorrow, Oct. 6. Analysts are pricing in 52 cents per share for the upcoming confessional, though ahead of the event CAG is sinking, last seen down 2% at $33.22. 

Along with the rest of the market, CAG is coming off two impressive days of trading, logging its best session since March 14 on Tuesday. The security has found support at its 1,000 day moving average, however, since staging a breakout above this trendline in June. Still, Conagra stock's performance has been nothing short of choppy during the past 12 months, putting the security at a slight 3.3% year-over-year deficit. 

cag oct 5

The stock is seeing an uptick in bearish options activity ahead of the event. Conagra's normally quiet options pits have seen 1,886 puts exchanged, which is six times the intraday average, compared to 761 calls. The most popular position by far is the January 2023 30-strike put. Data from TradeAlert suggests this is the work of one trader who purchased 1,400 contracts at a volume-weighted average price (VWAP) of $0.90. 

Today's penchant for puts is unusual, as options bulls have been ruling the roost lately. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 10-day put/call volume ratio of 3.40, which sits higher than 83% of readings from the past 12 months. In other words, options traders have been targeting calls at a much quicker clip than usual. 

Zooming out, it looks like these options players are pricing in a 6% post-earnings swing for CAG, which is double the 2.7% move the stock averaged after its last eight reports, regardless of direction. The security has a tendency to drop lower the day after earnings, with five of these returns being negative, and it's biggest positive return at just 0.4%.

 

 

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