Why Are Options So Bullish on This Chemical Manufacturer?
Huntsman has been charging straight up for the last month, and the bulls are still feeling positive chemistry.
OptionMonster's real-time tracking systemsdetected the purchase of about 16,000 December 10 calls yesterday against open interest of only 2,021 contracts. Early in the session, premiums rose from $0.25 to $0.70 despite the chemical company's stock climbing only $0.42 at the same time, which reflects a powerful buying pattern.
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Huntsman rose 3.43 percent to $10.26 yesterday and traded as high as $10.86. The buying comes a day after a presentation at the Bank of America / Merrill Lynch Credit Conference. While no major headlines emerged from the event, management may have provided investors with confidence about the company's ability to service its heavy debt load. Takeover rumors were circulating on the name as well.
It also presented on Dec. 1 at the Citigroup Basic Materials Conference. Huntsman chemicals are used in diverse applications including adhesives, building supplies, packaging, electronics, and paints.
The shares have been ripping higher since Nov. 4, when the company reported a big loss but forecast strength in the current quarter. Yesterday's price action may represent a breakout above the $9.85 level that's been serving as resistance.
Other investors sold the January 12 calls for $0.55, probably against positions in the shares. Some 5,223 contracts traded against no open interest. There were also buyers of the January 11 calls and sellers of the December 12.50 calls.
Overall options volume in the name was 26 times greater than average. Calls outnumbered puts by more than 7 to 1.
Huntsman Competes With:
Dow Chemical Company
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David Russell is a reporter and writer for OptionMonster.