Packaged food giant Mondelez International (MDLZ) is down 23% over the past year. One trader sees the downtrend continuing in the first half of 2025.
That’s based on the June $47.50 puts. With 133 days until expiration, 2,150 contracts traded compared to a prior open interest of 120, for an 18-fold rise in volume on the trade. The buyer of the puts paid $0.75 to make the bearish bet.
Mondelez shares recently traded around $56.60, after setting a new 52-week low of $54.12.
While Mondelez managed to grow its revenues by about 2% last year, overall earnings declined by 13%, reflecting higher overall costs.
The decline in shares has also taken Mondelez from about 22 times earnings last year to 17 times earnings. That’s likely a fair price for the company’s basket of branded food products, although it’s not quite an exceptional price yet.
Action to take: Mondelez shares are nearing the point where they’re a value play. But they’re not quite there yet. Interested investors should hold off for now, until shares can stop their current decline and start a new uptrend.
At current prices, Mondelez pays a 3.3% dividend, but will likely have a higher starting yield if prices continue to decline.
For traders, the June $47.50 puts are well positioned for a further decline in shares over the months ahead. Traders can likely see mid-double-digit returns from a further drop.
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.