A quick look at options actions week ended 8 Jul 2011
1. BSL.ASX (last $1.35)
Definitely one affected by the carbon tax debate/debacle, whichever way you choose to see it.
These options actions are observed Thursday, Friday past, a couple of trading days before C-Day on Sunday. Whether these trades prove to be “smart” money or not, we will know on Monday (11 Jul).
These are what’s been observed.
There were visibly more puts traded on BSL Thursday and Friday, with a switch from the calls side on Wednesday. These volumes on puts seem to be for buying as well. Especially on Thursday, there was a buying of 20,000 contracts of puts in 1 trade. The put interest was for the July $1.20. which is also the one with the largest Open Interests in all BSL puts.
In addition, selling of calls has set in as well at the $1.50 level. One that attracted attention on Friday was the Aug $1.50 call. Most opened calls are positioned at the Jul $1.50, followed by $1.40′s.
In brief, there is some nervousness for BSL at the $1.50 level and some have taken protection, in case the news on Sunday negatively impacts the stock, and renders it falling all the way back to $1.20.
2. IPL (last $4.01)
IPL is NOT one often featured in the options space, but stood out last week.
On Friday, as the stock was about to breach above the $4 level, there was a large buying of calls when the share was trading around $3.98. It was the Jul $4.00 call which was in demand and traded for about 9c. As this option is now in-the-money (with IPL closing at $4.01) any cent above the breakeven price ($4.09) will be a cent for cent profit for the buyer until 28 Jul expiry (19 days away).
WHAT’S UP WITH IPL?
1 Technical analysis calls it a Buy with a break above $3.97 (the move above could be technically motivated)
2 IPL provides exposure to both the rising soft commodity markets and leverage to an economic recovery in North America. In addition, IPL’s earnings tend to be skewed towards its 2nd half. With Fertiliser, 70% of its earnings comes in 2nd half as fertilisers are applied on cereal crops and cotton throughout the winter months in Australia. For Explosives, 2nd half tends to be bigger earnings period as well as construction (in quarry etc) increases in summer months in North America.
Though there was a contrarian trade in the market as well, with some large volume of selling of Sep call at $4.00 went through at 24.5c per contract last Thursday, but overall the weight of trade is on the call side, especially on Friday, there were 3 times more calls traded.
3. FGL.ASX (Last $5.13)
Takeover play in FGL has cooled off last week especially with FGL rejecting SAB Miller’s $9.98 billion deal and also as SAB Miller said on Wednesday (6 Jul) it will be looking at acquisitions at Brazil too.
Buying of puts has set in on FGL.
The popular series were the Aug $5.05 put and Sep $5.05 puts. Selling of call options had been observed as well at the Jul $5.05 call level.
According to options action, it’s time to lock it in.
