Option Bulls See a Strong Week for The Coca-Cola Company (KO)

The Coca-Cola Co (KO) speculators target weekly 1/9 42.50-strike calls

Digital Content Group
Jan 5, 2015 at 2:37 PM
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Morgan Stanley weighed in on The Coca-Cola Co (NYSE:KO) today, bumping its price target to $47 and raising its outlook on the stock to "overweight" from "equal weight," stating that it expects the company's recent strategy changes to lead to improved results. In response, KO is up 0.5% at $42.34, and is just one of two Dow components in positive territory this afternoon.

In the security's options pits, speculators have been placing mostly bullish bets, with calls crossing at three times what's typically seen at this point in the day. This preference for calls is nothing new, per the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 4.16. This reading ranks only 1 percentage point from an annual bullish peak, implying that calls have rarely been bought to open over puts at a faster rate.

Taking a closer look, the most popular strike today is the weekly 1/9 42.5-strike call, where 11,451 contracts have been exchanged. Most of this activity appears to be of the buy-to-open variety, meaning the traders expect KO to break north of $42.50 by Friday's close, when the weekly series expires.

The analyst community, however, is still mixed toward The Coca-Cola Co (NYSE:KO). Of the 15 analysts covering the stock, seven rate it a "buy" or better, with another seven dishing out "holds," and one issuing a "sell" recommendation.

Weekly Chart of KO
 

  

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