Time is key to Huntsman call activity

optionMONSTER

One investor is playing it safe in Huntsman.

optionMONSTER's Heat Seeker monitoring system detected the sale of 22,000 June 19 calls for $1.30 and the purchase of an equal number of July 20 calls for $1.15. Volume was below open interest in the 19s, indicating that a long position was closed and rolled to the higher strike.

The investor collected a credit of $0.15 and has an additional month of upside exposure to the chemicals company. By adjusting the position now, he or she avoided the accelerating pace of time decay that will hit the June contracts over the next 4-1/2 weeks. (See our Education section for more on how to manage positions more effectively with options.)

HUN is down 0.66 percent to $19.58 in early afternoon trading. It rallied more than 60 percent between July and early March. But the shares have been churning in a range since then as it pushes against the same $20 level where they rolled over in July 2000.

That could be leading some chart watchers to believe that the stock will struggle to advance in the near term, but it could also suggest that shares will move sharply once resistance is broken. Either way, adjusting the trade now better positions the investor for such an outcome.

Total option volume is 6 times greater than average so far today, according to the Heat Seeker. Calls outnumber puts by more than 10 to 1.

More From optionMONSTER

View Comments (0)