Conagra Brands' stock fell sharply this week after the packaged-food company reported quarterly earnings that fell well short of analysts' expectations. We'll discuss how to play it with options if this company is caught in a longer-term decline. Known for brands like Birds Eye frozen vegetables, Hebrew National hot dogs, and Reddi-Wip, Conagra (CAG) 8% to $30.
08. For the fiscal first quarter ending August 25, Conagra posted an adjusted eps of 53 cents a share, missing estimates. Revenues of $2.
79 billion also fell short of estimates. However, the company did reaffirm fiscal 2025 guidance, projecting adjusted earnings per share between $2.60 and $2.
65, in line with analysts' forecast. At first glance, Conagra's PE (price-earnings) ratio of just over 11.5 times FY estimates likely looks relatively cheap, less than half the forward multiple of the S & P 500.
However, the most significant institutional options trades weren't betting on considerable upside. CAG YTD mountain Conagra, YTD Conagra traded eight times the average daily options volume, with puts outpacing calls. The two most active contracts were the January $30 puts and December $30 puts.
It appears an institutional trader was purchasing the January $30 puts for an average of just over 1.41/contract and selling the December 30 puts at an average of just over 1.15 per contract or 26 cents net.
At-the-money calendar spreads like this one are most profitable if the stock lands at the strike price on the expiration date. .
