Smithfield Foods, Inc. (NYSE:SFD) – Traders appear to be snapping up put options on hog producer, Smithfield Foods, Inc. (NYSE:SFD), ahead of the company’s second-quarter earnings report prior to the opening bell on Thursday morning. Shares in Smithfield Foods, Inc. (NYSE:SFD) are up better than 2% this afternoon at $22.99 as of 12:40 p.m. on the East Coast. Front month puts are most active, with fresh interest building across multiple striking prices. Put volume is greatest at the Dec. $19 strike, where some 2,200 contracts traded against open interest of just 115 positions. Time and sales indicates the bulk of the $19 strike put options were purchased this morning for an average premium of $0.15 apiece. The put options may provide downside protection for an investor long Smithfield Foods, Inc. (NYSE:SFD) stock, or could represent an outright bearish bet that shares will drop sharply after earnings. The contracts make money at December expiration if shares in Smithfield plunge 18% from the current level to trade below the effective breakeven price of $18.85. The Dec. $21 strike puts were also active in morning trading after one trader purchased around 755 contracts for a premium of $0.40 apiece. The $21 strike puts make money if shares in Smithfield Foods, Inc. (NYSE:SFD) decline 10.4% from the current price to breach the breakeven point at $20.60 at expiration.
Equity Options Analyst
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