TSN Stalled Out Amid Chick-fil-A Drama

The equity is down over 24% in 2020

Assistant Editor
Dec 7, 2020 at 10:38 AM
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The shares of Tyson Foods, Inc. (NYSE: TSN) are down 2.3% at $68.39 this morning, after the company, alongside Pilgrim's Pride (PPC), Sanderson (SAFM), and Perdue Farms, was sued by Chick-fil-A. The fast food chain accused the poultry producers of colluding to artificially raise chicken prices by sharing bidding and pricing details, which Tyson has denied.

As a result of today's negative price action, TSN is pulling back from its recent climb. In fact, on December 4, Tyson stock toppled the $70 level for the first time since March 4, though the rally was stymied by the stock's 320-day moving average -- a trendline that hasn't been close to being breached since February. While the equity is still clinging to a 15.3% quarter-to-date lead, its taken a 24.7% haircut in 2020.

Despite calls easily outpacing puts in the options pits, the preference for puts is still unprecedented. In the last 50 days, 0.82 puts were bought for every call at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 92% of readings from the past year, meaning puts are being picked up at a faster-than-usual clip. 

Now may be the perfect opportunity to take advantage of Tyson stock's next move with options. The security's Schaeffer's Volatility Index (SVI) of 29% sits in the extremely low 6th percentile of its annual range. This means the stock is currently sporting attractively priced premiums. 

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