Capitalizing on Huntsman Corporation Bull Run

04/03/2009 12:38 pm EST


Nick Perry

Equity Options Trader, Schaeffer's Investment Research

Huntsman Corporation (HUN) is being targeted by bullish options bettors. On Wednesday, traders on the International Securities Exchange (ISE) bought 1,141 calls on HUN, compared to just one put. I probably don't have to do the math for you on this one, but that translates to a single-day call/put volume ratio of 1,141.

HUN price chartWednesday's call frenzy was simply the extension of a recent trend on HUN. During the past ten days, investors on the ISE have bought an average of 146.5 calls for every put, which ranks higher than 95.2% of other such ratios taken during the past year. In other words, options players on the ISE have scooped up HUN's calls at a faster pace just 5% of the time in the previous 52 weeks.
In the May series, optimistic traders have set their sights on the 5-strike call.

This out-of-the-money option has 8,596 contracts in residence, establishing it as the site of peak call open interest in this back-month series.  The sudden interest in the stock's calls has likely been prompted by its strong price action.

From its February 24 low of $2.03, HUN has surged more than 65% and won the support of its ten- and 20-day moving averages in the process.

By Nick Perry of Schaeffer’s Trading Floor Blog


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