Options investors appear to be bullish on Yum Brand earnings

* Bullish option positions in Yum ahead of earnings

* Yum stock hits fresh 52-week high

By Angela Moon

NEW YORK, April 14 (BestGrowthStock) – Options investors appear to
be bullish ahead of Yum Brands (YUM.N: ) quarterly results after
the bell on Wednesday, hoping the stock’s recent rally keeps
going.

Yum, the parent company of the KFC, Taco Bell and Pizza Hut
fast-food chains, hit a 52-week high of $41.71 on Wednesday,
also up about 11 percent from a month ago.

“Looking at the calls traded, the sentiment is definitely
skewing to the bullish side. This is a pretty strong reading at
this time of the day, betting the company would outperform
earnings,” said Jon Najarian, a founder of Web information
site optionMonster.com.

Yum option volume exceeded its daily average with about
26,645 trades, of which about 20,000 were call options, said
Caitlin Duffy, option analyst at Interactive Brokers Group.

The most active strikes were the April $44 calls. With less
than an hour left in trading about 6,500 calls were purchased
at a premium of 15 cents, suggesting investors are expecting an
earnings surprise, Duffy said. Overall implied volatility was
up 2.9 percent to 27.73 percent.

But some analysts were less optimistic.

“Most of the trades are on the bid side of the market,
implying there are mostly sellers anticipating not much of a
move from today’s price after earnings,” said Steve Claussen,
chief investment strategist at online brokerage
OptionsHouse.com in Chicago.

Investors often turn to equity call options, allowing them
to buy a stock at a fixed price within a specified time period,
to speculate on stock price appreciation. A put gives the right
to sell stock at a fixed price by a certain date.

Wall Street expects Yum to report first-quarter revenue of
roughly $2.26 billion and earnings of 53 cents per share,
according to Thomson Reuters I/B/E/S. The company reported $2.2
billion in revenue and earnings per share of 48 cents a year
ago.

Stock Trading

(Reporting by Angela Moon, Editing by Chizu Nomiyama)

Options investors appear to be bullish on Yum Brand earnings