12/06/2013 FRI

Kellogg Company         NYSE: K

Kellogg’s has been in a down trend since it topped at 67.98 on 7/22/2013. The stock rallied back off the lo of 58.01 on 10/2/2013 hitting the 61.8% retracement, after which it has continued to show weakness. It looks like could be a nice play with trend support from the monthly chart coming in around 52 level with a couple Fibonacci retracements around 55.7 and 57 right where the stock broke out from at the beginning of the year. Watch for the stock to trade below 60.50 after which it could regain downside momentum again.

Avg. Volume    1,865,215

52 Wk High   67.98               52 Wk Low  54.53 

Resist   61.85*   62.88/63.05**    65.82***

Support   60.3/ 60.4*    60.05*   57/55.7**

PE Ratio Current Year Est. 3.76

IV    Jan 15.75%    Mar 16.61%

Look at buying the Jan 60 puts simply due to the lo implied volatility of 15.75% they offer inexpensive entry on a stock that is in a down trend coupled with a 42 day time frame. The Jan 60 puts closed at .925, though .85 or better is a good price based on risk v. time scenario.

The other play simply due to the upcoming holiday as well as the ever popular window dressing would be a Diagonal Calendar spread buying the Mar 62.5 put and selling the Dec 60 puts and then rolling the short Dec out to Jan depending where the stock is at that point in time.

Open Int. (est.)   strike   Dec Monthly (14)   Jan Monthly (42)   Mar 14 Monthly (105)

52.5                                      12                        242                          19

55                                       147                        549                        324

57.5                                    584                      2006                        304

60                                      1160                     5078                       1853

62.5                                   2883                     2684                       1753

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