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Bulls ride Huntsman at 5-year highs

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Huntsman has rallied more than 20 percent in just the last month, and one large investor is going back into the chemical company for even more gains.

optionMONSTER's Heat Seeker system shows that 4,900 October 20 calls were sold for $1.30 while the same number of November 22 calls were bought for $0.75. Volume was below previous open interest in the October strike but above it in the November contracts, indicating that a long position was rolled forward.

The trader is closing the nearer-term position, which expires in about two weeks, and is opening a new one a month later at a higher strike while taking some money off the table in the process. The new long calls are looking for HUN to rally above $22 but will expire worthless if it the stock remains below that strike price through mid-November. (See our Education section)

HUN rose 0.48 percent to $21.13 yesterday, its highest close since June 2008.

Option traders caught the run early when HUN was below $18 in mid-August. At that time our scanners found buying in the October 18 calls , which tripled a month later when Huntsman bought units of chemical maker Rockwood and was upgraded by Bank of America / Merrill Lynch to "buy" from "neutral" with a $24 price target.

Total option volume in Huntsman yesterday was more than double its daily average for the last month. Only 233 puts changed hands, a reflection of the session's bullish sentiment.

(A version of this post appeared on InsideOptions Pro yesterday.)

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