Shares of consumer goods giant Unilever (UL) are down just 6 percent in the past year, outperforming the S&P 500 by nearly 10 percent. One trader sees shares moving higher to close out the year.
That’s based on the December $50 calls. With 20 days until expiration, 8,516 contracts traded compared to a prior open interest of 388, for a 22-fold rise in volume on the trade. The buyer of the calls paid $0.60 to make the bet.
Shares recently traded just over $49, making this an at-the-money trade. Unilever shares have traded as high as $54 in the past year.
The consumer goods company has seen revenues rise by nearly 15 percent, as they’ve been able to raise prices to combat inflation. But price increases and global currency fluctuations have hurt the bottom line, as overall earnings are down 7 percent this year.
Action to take: As a global leader in consumer staples, shares are reasonably priced at about 17 times earnings and are worth accumulating for the long term. Plus, the stock pays out a 3.7 percent yield at current prices, and they have a history of raising the dividend.
For traders, the option is a reasonable short-term bet going into the end of the year. It can likely deliver high-double-digit gains in the coming days. Traders may want to just grab a smaller gain on a rally in shares and get out before expiration.
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.