LyondellBasell gets pre-earnings bet
David Russell | email@example.com
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.