Options Point to Bullish Sentiment, Equity Investors Eye Aluminum Index

• By the tickerspy.com Staff
• On 11:40 am EDT, Wednesday October 7, 2009

Alcoa (NYSE: AA - News) is set to kick off third-quarter earnings season after-the-bell.

Investors eyed options activity Wednesday ahead of Pittsburgh-based aluminum giant Alcoa's third-quarter results. According to The Wall Street Journal, traders were picking up October $14 calls and November $15 calls, suggesting a bullish outlook for the report. Throughout the morning, Alcoa shares seesawed, putting $14 options in and out of the money repeatedly, as equity investors placed their bets.

Credit Suisse likes call spreads ahead of Alcoa's earnings, an options strategy that involves buying near-the-money calls while simultaneously selling out of the money calls of lesser value. According to Bloomberg, the analyst said, "sentiment in the option market ahead of earnings is more positive," but he continued to note limited downside risk in the event of a disappointment as an advantage to the option strategy.

Some components of the Aluminum Stocks Index are outperforming Alcoa significantly ahead of its report.

Monterey, California-based Century Aluminum (NASDAQ: CENX - News) and Australia's Alumina (NYSE: AWC - News) are both bucking a -1% decline in the metal's futures with 3% gains.

Meanwhile, Reliance Steel & Aluminum (NYSE: RS - News) and Aluminum Corporation of China (NYSE: ACH - News) are moving only fractionally.

Kaiser Aluminum (NASDAQ: KALU - News) and Virginia-based Tredegar (NYSE: TG - News) are both down by -1% today's session.

The Aluminum Stocks Index is currently one of the top-5 cheapest tickerspy Indexes by P/E ratio with an average multiple of 8.4x.

Fun and informative, tickerspy.com is a free investing website where you can track multiple stock portfolios and compare against 250 proprietary Indexes tracking themes from nanotech to agriculture to precious metals. Best of all, tickerspy.com lets you spy on the portfolios of nearly 3,000 Wall Street institutions and hedge funds and see graphs of their performance. Try tickerspy.com today and find out how you stack up against investing legends like Warren Buffett!

Buzz up!