Bloomberg News

Heinz Options Bet Before Deal Gives $1.9 Million Profit

February 14, 2013

Heinz Options Bet Before Buffett Deal Gives $1.9 Million P

H.J. Heinz Co. ketchup products sit on display at a supermarket in Princeton, Illinois. Photographer: Daniel Acker/Bloomberg

Options traders who piled into bullish HJ Heinz Co. (HNZ:US) bets before Berkshire Hathaway Inc. and 3G Capital agreed to buy the ketchup maker made almost $1.9 million on the wagers.

Nearly 2,600 June $65 calls, which give the right to buy the underlying shares, changed hands yesterday for about $91,900, data compiled by Bloomberg show. The contracts, which have an exercise price 6.8 percent above the Feb. 12 close, were worth $1.96 million at 10:57 a.m. in New York today, creating a profit of $1.87 million. Overall call volume (HNZ:US) rose to 3,460 contracts yesterday, the most since Jan. 31 and almost 14 times more than trading in puts.

Warren Buffett’s Berkshire Hathaway and Jorge Paulo Lemann’s 3G Capital agreed to buy Heinz for about $23 billion today as the billionaires increased their bets on consumer products. Heinz shares jumped 20 percent to $72.51, adding $3.86 billion to Pittsburgh-based company’s market value, according to data compiled by Bloomberg.

“The amount of activity prior to the announcement has certainly generated some interest,” said Ioan Smith, a strategist at Knight Capital Europe Ltd. in London. “I’m sure those that got involved will be able to afford more than a few tins of baked beans today!”

Bullish options trading surged to 10,787 contracts today, with January $60 calls changing hands the most, data compiled by Bloomberg show.

To contact the reporter on this story: Cecile Vannucci in Amsterdam at cvannucci1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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