Options Bears Jump on Tyson Foods After Walmart Announcement

Walmart will create its own beef supply chain to compete against Tyson Foods

Managing Editor
Apr 24, 2019 at 2:25 PM
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The shares of Tyson Foods, Inc. (NYSE:TSN) are down 1.4% to trade at $73.56 today, after Walmart (WMT) announced it was creating its own Angus beef supply chain. Walmart intends for its products to share shelf space and be similarly priced as Tyson's. Also, Tyson also announced it was selling its stake in Beyond Meat, a plant-based producer. Amid these headlines, TSN's normally dormant options are coming alive today.

More specifically, more than 8,800 TSN options have changed hands today -- three times the expected intraday amount, and volume pacing for the 98th percentile of its annual range. There's notable activity at the weekly 5/3 71-strike put and 76-strike call, where spread activity may be detected.

It appears one trader bought to open 3,000 of the 71-strike puts for 35 cents each, while simultaneously selling to open 1,500 of the 76-strike calls for 5 cents apiece to help fund their endeavor. If the trader did initiate such a spread, he or she is betting on a sharp pullback for TSN.

Whatever the motive, the security is no stranger to put traders. According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Tyson stock sports a 10-day put/call volume ratio of 1.50, which ranks in the elevated 77th percentile of its annual range.

On the charts, Tyson stock initially traded up to $74.88 today, a 12-month high, before pivoting lower. Today's pullback has found support at the shares' 10-day moving average, and TSN still boasts a 37.3% year-to-date lead. 

Daily Stock Chart TSN


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