LyondellBasell gets pre-earnings bet
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring program detected the purchase of some 12,400 May 65 calls yesterday in volume far above the previous open interest of 2,031 contracts. Early blocks priced for $0.40, but premiums rose to $0.70 by the afternoon as the shares nudged higher.
These long calls lock in the price where the Dutch chemical maker can be purchased, providing investors with upside exposure at a fraction of the cost. Their cheap price could also provide gigantic leverage in a rally. For instance, a 16 percent gain in the shares would inflate the options by about 1,000 percent.
LYB rose 1.67 percent to $60.33 yesterday and is up 37 percent so far this year. It peaked around $65 in March, so yesterday's call buyer may want to make sure he or she doesn't miss a breakout above that level. (See our Education section for more on how options can be used to manage trades.)
Some 16,500 contracts changed hands in the session overall, almost 6 times more than its normal daily turnover. Calls outnumbered puts by a bullish 24-to-1 ratio.