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Unusual Options Breakdown: Beyond Meat (BYND) is a Trade, Not an Investment
On the surface, plant-based meat specialist Beyond Meat (BYND) seems like a no-brainer opportunity. According to its corporate profile, Beyond manufactures a wide range of products that simulate the taste and texture of animal-protein-based classics. Of course, as society becomes more evolved, the idea of raising living creatures for food runs counter to progressive ethos.
That’s where BYND stock enters front and center stage. Again, with Beyond’s product portfolio – which includes plant-based beet, chicken and sausage, among other categories – people can feed their carnivorous cravings but without the guilt. More importantly, market research data indicates that possibly the vast majority of young people will default to alternative meat if available as an option.
Money talks (and something else walks). So, just on the basis of capitalistic principles, BYND stock should be flying. It is, but just not in the direction that early proponents had been hoping. Unfortunately, drilling into some of the details, Beyond Meat just might not be that appropriate as a long-term investment.
But as a short-term bullish swing trade? That could be a more appetizing proposition.
Unusual Options Activity Lays Out a Tempting Framework for BYND Stock
While investors have myriad ideas available for trading, they should first consider assessing Barchart’s screener for unusual stock options activity first. Why? It’s like understanding the pitch count and the game situation before taking a swing. This data interface gives you an insight into what the smart money may be doing with its money.
An intriguing highlight from Monday’s price action is the subject of this article. At the closing bell, total options volume for BYND stock hit 76,096 contracts against an open interest reading of 376,961. This figure represented a 195.08% lift against the trailing one-month average volume. Breaking it down, call volume hit 52,370 contracts versus put volume of 23,726.
A face-value reading of this framework implies optimism. The put/call volume ratio comes in at 0.45, meaning that more traders are engaging call options than puts. However, it’s important to note that options can be bought and sold. Therefore, it’s always a good idea to check Barchart’s options flow screener before diving in.
Options flow cuts out all the noise from small-time retail traders putting in their orders for two or three contracts. Instead, it focuses on the meat (no pun intended): big block transactions likely placed by institutional investors. Here, the narrative doesn’t look so favorable for BYND stock.
Per Barchart, net trade sentiment sits at $21,400 below breakeven, thus slightly favoring the bears. However, there’s a catch: the highest premiums paid for options with bearish sentiment is for longer-expiry contracts, particularly the sold JAN 16’26 3.00 Calls. This trade implies that BYND stock may dip below $3 by January of 2026. That’s not an impossible outcome.
However, there are several sold calls with an expiration date of June 28 – this coming Friday. Also, the strike prices range mostly around $6.50 to $7.50 That’s a risky wager because Beyond Meat could potentially pop higher in the near term.
Notably, the short interest of BYND stock stands at a stratospheric 39.09% of its float. Also, the short interest ratio – or the time necessary to unwind all bearish positions – comes in at 15.47 days to cover. A sizable upswing could lead to a panic among the pessimists, causing a positive feedback loop that sends BYDN even higher.
A Questionable Investment to Say the Least
Although speculators could potentially scalp a quick profit from BYND stock by taking the bullish route, they may be wise to avoid indefinite exposure. As mentioned earlier, the sold $3 calls could eventually turn out to be profitable.
Unfortunately, the main problem with Beyond Meat is that the business isn’t growing fast enough – nor is it profitable – to justify its rich premium. That sounds strange at first, with BYND stock trading at 1.29X trailing-year revenue. In contrast, the packaged foods sector runs an average sales multiple of 1.19X. Beyond Meat is overvalued, technically speaking, but not by much.
However, analysts only expect the company to post revenue of $322.78 million for fiscal 2024. That’s down 6% from last year’s print of $343.38 million. Assuming a shares outstanding count of 64.88 million, BYND stock is actually trading at 1.34X forward sales.
The thing is, Beyond Meat has traded at elevated multiples before: 1.55X during the first quarter of this year, 1.63X during Q4 2023, up to 2.46X throughout Q1 2023. The market has consistently rejected these premiums. So, the projected multiple of 1.34X might not last.
But that’s a long-term argument. In the immediate frame? If you’re the gambling type, BYND stock looks enticing.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
