Kraft Heinz's About Turn and FCF Growth Leads To Huge Unusual Call Options Trading
The Kraft Heinz Company (KHC) reported strong free cash flow for Q4 on Feb. 11, and the new CEO stopped KHC's plans to separate into two public companies. As a result, it has led to huge, unusual call options activity as seen in Barchart's recent report.
The Barchart Unusual Stock Options Activity Report from late Monday, March 16, shows massive activity in KHC call options expiring at the end of March (3/27/26). As a result, presents an interesting opportunity for value investors. This article will delve into this.
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Unusual Volume in KHC Call Options
KHC closed at $22.71 on Monday, March 16, down from a recent peak of $24.99, just before the earnings release, but up from $22.58, its trough on March 13.
The Barchart Unusual Stocks Options Activity Report shows that call options with exercise prices at $23.00 and $23.50 expiring March 27 have had huge trading activity. This can be seen in the table below from the Barchart Report.
It shows that the investors buying and selling $23.50 calls due March 27 traded 13,440 contracts. That is almost 100x the prior number of option contracts outstanding (i.e., the Vol/OI column is 98.82x).
Similarly, over 13,325 $23.00 calls traded, over 80x the prior number of contracts.
This indicates massive institutional call option buying. Let's look into why they might be so bullish.
Kraft Heinz's Strong Free Cash Flow
Kraft reported on Feb. 11 that net sales fell 3.5%. However, its operating cash flow (OCF) was up 6.6%, and free cash flow (FCF), which deducts capex from OCF, rose 15.9%.
That has led to an increase in its FCF margins and also an increase in the FCF “conversion” rate. That is the portion of net income that becomes or converts into free cash flow (FCF).
This may be what the new CEO, Steve Cahillane, saw and why he decided to keep the company together.
For example, the table above shows that the FCF margin for all of 2025 was almost 15% compared to 12% in 2024. Stock Analysis shows that the Q4 FCF margin was actually 18.43% vs. 15.81% in Q3 and 17.35% in Q4 2024.
The point is that the company's cash generation, despite lower sales, is actually leading to higher free cash flow. It's squeezing out more cash from operations.