Market Insights

Options activity surged in Coca-Cola yesterday as strong results triggered the biggest rally in years.

More than 206,000 calls traded in the beverage giant on Tuesday, according to TradeStation Data. It was the highest total since June 2021, with transactions focused on contracts expiring this week and next.

• The 14-February 68 calls led the charge with more than 29,000 contracts trading against open interest of 2,874. Premiums started the day at $0.47 when the shares were at $57.58. They dipped to $0.06 as the stock fell and ended the session at $0.26.
• The 14-Feburary 67s saw volume of more than 9,700 contracts against open interest of 3,182. Premiums ranged from $0.26 to $1.25 as the stock moved throughout the day.
• The 14-February 66 calls and February 70 calls (expiring on February 21) also traded heavily although volume roughly matched open interest. (As a result, it’s not clear whether new positions were initiated.)

Calls fix the price where investors can purchase security. They can appreciate rapidly when a stock rally, or expire worthless if certain levels aren’t reached.

Coca-Cola (KO), daily chart, with select patterns and indicators.

KO had its best day since November 2020, climbing 4.7 percent to $67.60. Strong earnings and revenue powered the move. Investors also focused on the 2 percent case-volume growth, which suggested the soda maker is successfully adjusting products for inflation-squeezed consumers.

The company made an all-time high of $73.53 last September before sliding toward $60 last month. Yesterday’s surge brought it back near a zone where it fell in October on weak case volumes. That highlights the importance of organic growth and product mix, which often boost margins.

Overall options volume was about quadruple the average in the last month. Calls accounted for a bullish 80 percent of the total.

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