General Mills, Inc. (GIS)

Post by:

General Mills, Inc. (GIS) is a Minnesota based consumer processed and packaged foods manufacturer with both domestic and international distribution networks. At the time of this post (11:50AM CST), GIS is currently trading at 51.95, up 0.85% on the session. GIS has bounced around its 52 week trading range of 46.70-55.64 for most of the year, and currently sits just about in the middle of this relatively narrow range. GIS is scheduled to report earnings tomorrow, 12/17/2014, before the bell, and will be looking to buck its recent bearish trend after selling off -3.6% and -4.4% the last two quarters respectively following its earnings releases.

Despite the last two quarters of bearish post-earnings reactions, GIS has been evenly mixed overall the last eight quarters, trading higher and lower equally four out of eight times immediately following the EPS release. The average historical move during this time period has likewise been fairly unremarkable, with a directional average move of just 1.7%. Currently the options market is pricing in an large relative move of between 3-6% based on the pricing of the ATM straddle. These currently inflated volatility levels in the GIS options would appear to create an opportunity to capitalize on a neutral strategy that would benefit from a smaller than anticipated move in the options that have just over three days to expiration on this Friday, 12/20/2014. GIS has found some Ichimoku Cloud support on the daily chart, but still remains below most of the relevant moving averages and firmly entrenched in the choppy, sideways trading action that has characterized most of 2014 for the stock. I am not anticipating any significant change in character in GIS following tomorrow’s earnings release, and will therefore be looking to structure a neutral trade that will allow me to benefit from what I believe to be a lackluster reaction in conjunction with an overly priced-in move in the options.

Trade: Selling the GIS Dec 47.5-50-52.5 Iron Butterfly for $1.95
Risk: $55 per 1 lot
Reward: $195 per 1 lot
Breakeven: $48.05 and $51.95

Regards,

Regards,
Andrew Keene
KeeneOnTheMarket.com

Submit a Comment

Your email address will not be published. Required fields are marked *

VIP NOTIFICATION SERVICE

TIRED OF BEING THE LAST TO KNOW ABOUT THE LATEST WINNING TRADE?

Join our VIP Notification Service and Be Among The First To Know About All The Latest Trade Ideas, Trading Tips, Highly Profit Potential Trades, and Market Predictions From Our Team of Expert Traders!
Join Text Messaging List
By providing your mobile phone number and clicking on the above button, you agree to receive automated promotional messages from us. By opting into our SMS Program, you agree to our Terms and Conditions and Privacy Policy  
You have to agree on terms in order to proceed to the subscription.

• FREE VIP NOTIFICATIONS •

Get Our Free Daily Trading Videos

Delivered To your Inbox

By submitting your information you agree to our Terms of Service and our Privacy Policy