Wednesday, August 18, 2010

Huntsman (HUN) - Something Big or Nothing at All

HUN is trading $9.50 with IV30™ up 1.8%. The LIVEVOL™ Pro Summary is below.

This trade looks just like a call roll. Where someone closes the position in the front month into expo and re-opens in the second month. It's the prices and the broker's reluctance to give color that has me curious. I feels like it might be purchase/purchase. Tomorrow we'll know if this was just the most boring trade (and blog) ever based on the OI change, or if there was something to it.

Keep in mind, HUN has a wild history with takeover rumors.

The company has traded over 20,000 options in the first three hours on total daily average option volume of just 2,616. Every contract has been a call (zero puts). It's the Aug 9 calls, Sep 9 calls and Sep 10 calls that are trading. My first impression was that this was simply a call roll (close Aug, open Sep). But looking at the trade prices, I'm not convinced. The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).

Note the prices in the 8,500 spread; looks like purchase/purchase. The Sep 10 calls are also purchases.

The Options Tab (click to enlarge) illustrates the action . The Aug 9 calls are short OI, so this purchase closes that (looks like it was done for ~ $0.15 gain). The OI in the Sep 10 calls looks like long to me, so this is going to raise that interest. I believe the OI in the Sep 9 calls is short. The trade volume on that line is well above the OI today though.

I've included the Level II pop-out for the Sep 10 calls. Note how the OI has jumped in the last week from ~450 to nearly 7,000; not including today.

Update tomorrow. Hopefully I didn't just draw all of our attention to nothingness. But it's possible I did, and if so, my bad...

This is trade analysis, not a recommendation.

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