The Kraft Heinz Company (KHC), Trending Stock Report

The Kraft Heinz Company (KHC) share prices are compressed. You can see in the chart below that when the stock gets this compressed (the intersection of the blue horizontal and vertical lines), it tends to make a big move over the next few weeks. On top of that, KHC is expected to announce earnings before the November 15^th options expire.

Volatility expectations are slightly elevated as investors begin to anticipate a big move around the earnings report. However, based on the way the stock has moved after the shares got this compressed in the past, options traders may still be underestimating the size of the future move.

This Volatility Term Structure chart for KHC shows us the implied volatility for the at-the-money options for each expiration. As you can see, the options expiring on November 15th – after the earnings report – have an implied volatility of 23.08, while the options expiring on October 18th – before the earnings report – have an implied volatility of 18.52.. That is not a huge difference in volatility expectations. We are looking specifically at the monthly options expirations for KHC because those options have good liquidity.

KHC share prices are trending flat. Volatility expectations for monthly options expirations are relatively flat as well. The stock has a history of making big moves shortly after the stock prices have been compressed to this level. Plus, there is an earnings report due before the November monthly expiration that could be a potential catalyst for a big move. This is an option buying opportunity.

To get the specific details and prices on today’s trade ideas, be sure to read today’s ODDS Online Daily Option Trade Idea.