Unusual Options Activity: WestRock Company (WRK)

Packaging and container firm WestRock Company (WRK) is up 7 percent over the past year, about half as much as the overall stock market. One trader sees shares trending higher in the coming weeks.

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  • That’s based on the December $37.50 calls. With 35 days until expiration, 14,107 contracts traded compared to a prior open interest of 249, for a 57-fold rise in volume on the trade. The buyer of the calls paid $1.95 to make the bullish bet.

    WestRock recently traded right at $37.50, making this an at-the-money trade. Shares are also close to their 52-week high of $39.30.

    Packaging and containers are a bellwether for the health of the overall economy. Consumers have been spending less on goods right now, focusing more on services such as travel and entertainment.

    WestRock has seen earnings drop by nearly 50 percent the past year, and revenues are down 7 percent. At current prices, shares trade at about 12 times earnings, and shares now trade at their book value.

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  • Action to take: Investors may like shares here going into the holiday season, where consumer spending may tick up on goods. At current prices, shares pay a 3.2 percent dividend.

    For traders, the December $37.50 calls can likely see low-to-mid double-digit gains, as they’re already at the money. But it’s a good short-term bet given current market conditions and going into the peak of the consumer spending season.


    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 of the companies mentioned in this article.

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