Unusual Options Activity In Coca-Cola

rollandthomas (74)in #investing • 6 years ago

Coca-Cola CEO James Quincey was on CNBC yesterday and said the company is unlikely to match the six deals it made in 2018, next year. For example, in this past August, Coca-Cola acquired British coffee chain Costa Coffee for $5.1 billion.

The coffee acquisition allows Coca-Cola to service customers with both hot and cold beverages. Despite the hype or promise depending on how you perceive Cannabis, James also said that Coke will not include CBD, a cannabis compound, in any of its products until it is legal, safe and consumable.

NOTE: Coca-Cola has denied rumors that it was talking with marijuana producer Aurora Cannabis ACB-CA about a possible partnership.

>"As we lean forward into a broader portfolio, we're starting to get the growth people want us to start riding, and I think that's coming through in the stock," Quincey said. Shares of the company are up more than 7 percent so far this year, standing relatively strong against broader market volatility. Coke has a market value of $209.8 billion, higher than its more diversified rival PepsiCo PEP, which is valued at $165 billion.

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Comparing Coca-Cola and the S&P 500, Coca-Cola returns in 2018 year to date is 11X compared to the S&P500.

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Also, since 2013, Coca-Cola has been making a series of higher highs and higher lows.

So why was there unusual options activity betting against Coca-Cola yesterday. Smart Money thinks that Coca-Cola will be trading below $40 by January 2020.

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In addition, Smart Money thinks that Coca-Cola will be trading below $30 by January 2021.

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One thing I noticed was each time Coca-Cola made new highs, RSI and price dropped and that dropped was approximately a $7 drop over a six month period.

Thus, based on the past two year pattern, the chart suggests price will drop to $42 by June of 2020. If this happens, just another example of why they are called the Smart Money.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

Published by Rolland Thomas on