Unusual Options Activity: Krispy Kreme (DNUT)

Shares of doughnut maker Krispy Kreme (DNUT) soared 35% on Monday, following news that its product would start appearing at fast food giant McDonald’s (MCD). One trader sees the rally continuing in the coming weeks.

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  • That’s based on the April $15 calls. With 22 days until expiration, 8,3405 contracts traded compared to a prior open interest of 144, for a 58-fold rise in volume on the trade. The buyer of the calls paid $2.00 to make the bullish bet.

    Krispy Kreme shares soared to nearly $17 on the partnership news, meaning the option is about $2.00 in-the-money. The jump higher also marks a 52-week high for shares.

    Krispy Kreme has struggled operationally in the past year. While revenues grew by 11%, overall the company lost money.

    The new partnership could allow for a turnaround in the company’s finances, pushing shares even higher.

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  • Action to take: Shares likely have more upside ahead in the weeks and months ahead. Investors can buy shares now to play the momentum higher. Krispy Kreme also pays a 0.9% dividend at current prices.

    For traders, the April calls are well positioned for mid-double-digit gains in the coming weeks.

    Traders may want to take some quick profits on such a trade now, then wait and see early results from the partnership for making further trades.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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