By Mike Yamamoto
Buyers are piling into Kellogg (K) today after the cereal company announced that it is buying Procter & Gamble's (PG) Pringles brand.
optionMONSTER's Heat Seeker system shows that 8,374 calls have traded in a strong buying pattern against open interest of 5,015 contracts. Premiums began the day at $0.20 and have shot all the way up to $0.95 as the stock has run higher.
K is up 5.25 percent to $52.94 even as the broader market turns negative this afternoon, blowing through its 100-day moving average and now sitting pennies below the 200-day level. Technical traders may be looking for shares to continue filling a gap that opened in early November when the stock fell from above $54 on weak third-quarter earnings and guidance.
Earlier this month the company beat fourth-quarter earnings and revenue estimates, citing higher prices. Many analysts say that Kellogg will benefit further from the $2.7 billion Pringles purchase, allowing the company to expand both its product line and its international business.
Kellogg announced the surprise purchase in the pre-market today as an earlier deal to sell Pringles to Diamond Foods (DMND) fell through amid that company's accounting scandal.
Overall option volume in the name is 21,394 so far today, nearly 7 times its daily average. Calls at all strikes outnumber puts by 5 to 1, a reflection of the session's bullish sentiment.
