Bulls ride Huntsman at 5-year highs
Mike Yamamoto | [email protected]
optionMONSTER's Heat Seeker system shows that 4,900 October 20 calls were sold for $1.30 while the same number of November 22 calls were bought for $0.75. Volume was below previous open interest in the October strike but above it in the November contracts, indicating that a long position was rolled forward.
The trader is closing the nearer-term position, which expires in about two weeks, and is opening a new one a month later at a higher strike while taking some money off the table in the process. The new long calls are looking for HUN to rally above $22 but will expire worthless if it the stock remains below that strike price through mid-November. (See our Education section)
HUN rose 0.48 percent to $21.13 yesterday, its highest close since June 2008.
Option traders caught the run early when HUN was below $18 in mid-August. At that time our scanners found buying in the October 18 calls, which tripled a month later when Huntsman bought units of chemical maker Rockwood and was upgraded by Bank of America / Merrill Lynch to "buy" from "neutral" with a $24 price target.
Total option volume in Huntsman yesterday was more than double its daily average for the last month. Only 233 puts changed hands, a reflection of the session's bullish sentiment.
(A version of this post appeared on InsideOptions Pro yesterday.)