Unusual Options Activity: Beyond Meat (BYND)

Shares of plant-based protein alternative Beyond Meat (BYND) have been in a downtrend. At least one trader sees the company turning around as it reports earnings later this week.

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  • That’s based on the May 14th $150 call options. With 9 days until expiration, over 2,840 contracts traded against a prior open interest of 108, for a 26-fold rise in volume. The buyer of the option paid about $0.86 to make the trade.

    Shares of the company trade around $126. In order for the option to expire in-the-money, shares will need to rally about 19 percent more from here. That’s a bit of a stretch, even though the company has been prone to some large volatility.

    Shares recently saw a “death cross” with the 50-day moving average drop under the 200-day moving average. That’s usually a warning sign that a downtrend may continue.

    Action to take: For traders making an earnings season bet and expecting the company to fare well here, the options are cheap. That limits the downside, and could lead to triple-digit returns, although investors may want to take profits quickly.

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  • A better bet from here may be a put option trade, like the June 18th $115 puts. Last trading for about $4.60, a further drop in shares could provide mid-to-high double-digit returns on the downside, and the trade would have more time to play out.

     

    Disclosure: The author of this article has no positions in the stock mentioned here, but may make a trade on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.