Shares of San Francisco based snack food maker Diamond Foods(DMND) tanked over 42% on huge volume this morning after the company announced yesterday evening that they would have to restate there 2010-2011 financial statements following the negative results of a 3 month Audit investigation that was not favorable for DMND shareholders in the short term… The audit was conducted because of an alleged accounting scandal over the momentum payment from DMND to its Walnut growers.. To put the icing on the cake, the CEO and CFO are being removed from the company. Definitely not a fun day for those long the stock…However, I still love Diamond Foods Wasabi Almonds and the rest of their yummy products. So, I bought shares of the stock on all of this bad news today. Consumers will continue to gobble up there tasty nuts around the globe for sure and this is a short term thunderstorm for the company that provides a great opportunity to buy the shares at a deep discount….
So what is the Options play?! Diamond Foods: http://www.diamondfoods.com. Check out this article written by the Wall St. Journal today on Diamond Foods. The WSJ reports a record trading volume day in Put and Call Options on Diamond Foods Inc.: http://blogs.wsj.com/marketbeat/2012/02/09/taking-a-bullish-flyer-on-diamond-foods/?mod=yahoo_hs.
WSJ Reports: Diamond Food CFO’s To-Dos: Restate, Then Rebuild…
I purchased the Feb 17, 2012 $23 strike Call Options on DMND today for $1.45 a contract and would be a buyer of the longer term Call Options as well. Attached is the Options Chains for the DMND June 15, 2012 Put/Call Options courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=DMND&m=2012-06. I would be a buyer of the DMND $22.50 strike Call Options for $3.40. I am also a buyer of the stock under $23 a share and believe it is a great long term investment. I love San Francisco and love this SF Nut Company!!! The Pringles acquisition may not happen now because of this terrible news today…however, I would personally prefer the company not to purchase Pringles from Procter and Gamble and feel that DMND is paying way too large a premium for this brand name chip franchise. Reuters reports:Procter & Gamble likely to terminate Pringles deal with Diamond Foods, NYT saystheflyonthewall.com (Thu 11:47AM EST). Stay tuned to Optionshoney.com for more Options plays… 🙂
Check out the ten day chart of DMND courtesy of Fidelity Investments: