Friday, March 25, 2011

Huntsman (HUN) - Calls Trading, Skew Moving, Rumors Continuing

HUN is trading $17.59, up 5.1% with IV30™ up 10.6%. The LIVEVOL® Pro Summary is below.


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Huntsman Corporation is a manufacturer of differentiated organic chemical products and of inorganic chemical products.

This company has been a takeover target/rumor for so long I can't even remember when it started. Today, the rumors have returned.

The company has traded nearly 17,000 contracts on total daily average option volume of just 3,382. Calls have traded on a 46:1 ratio. The Stats Tab and Day's biggest trades snapshots are included (below).

Turning to the Options Tab we can see the action. The Apr 18 calls have traded more than 9,500x on relatively small OI while the Apr 19 calls have traded more than 1,800x on relatively small OI. The direction feels like purchases as the vol is up, the stock is up, and the skew is tilting. The actual execution prices are ambiguous though in terms of backing out a direction. So, it's circumstantial evidence at this point.

The Skew Tab snap (below) illustrates the vols by strike by month.

We can see the Apr upside skew goes straight up as vol by line adjusts to the order flow. A vol divergence has opened up between the upside in Apr and May on the 19 line (the 20 strike in Apr is just nickel bid, so don't get too excited).

Finally, the Charts Tab (6 months) is below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

We can see an abrupt reversal in the IV30™ as of today's 10%+ pop. Right now IV30™ is above both the short-term realized movement of the stock (HV20) and the long-term trend (HV180), but not by much. We can also see that IV30™ reached as high as 46.41 as recently as 3-16-2011, so if the vol is going to start rising, there may be some room yet to go.

Possible Trades to Analyze
I'll keep this generic (ish). There are some upside skew trades on the board whether they be in Apr or Apr to May.

For you traders that like to sell vol (hi, I'm a vol seller), as I mentioned earlier, there is a possibility the vol creeps even higher, so analyzing a vol sale is worth the time, but it might be worth revisiting that analysis in the near future.

This is trade analysis, not a recommendation.

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  1. Great update to your site... If only I was an options trader... Good input on HUN. I could see a takeover knowing the Huntsman Family Goals... Lynn Hoggan SLC, UT

  2. Boughtt 50 calls today when John Najarian talked about HUN on CNBC around lunch. It's the lemming trade.

  3. Hopefully it works out. Will be inetersting if vol rises what happens to the skew.

  4. How long has the For Sale sign been in front of HUN? What is the replacement cost of HUN's worldwide chemical plants with a decade to duplicate? Which country would like to be a big player in this bacic industry asap? Is that country awash with US dollars? Where has HUN founder's son been for the last 18 months?