Huntsman (HUN) pulled back to its 100-day moving average on Thursday and the bulls piled in.
OptionMonster's trade scanners detected heavy buying in the February 24 calls, with large blocks initially pricing for 20 cents. The stock pushed higher, and before long premiums reached 40 cents. More than 15,700 traded in volume well above the strike's previous open interest of 9,232 contracts, indicating that new money was put to work.
These calls lock in the price where the chemical stock can be purchased, letting investors cheaply position for a move higher. Because those contracts cost so little to buy, they can generate major leverage on a percentage basis if the shares rally.
Hunstman's shares were down slightly when the calls first hit but then rebounded and ended the session up 0.67% to $22.48. The bounce also came after the stock traded below its 100-day moving average for the first time since September.
The company has not announced the date of its next earnings release, but last year's calendar suggests that it will occur in the first half of February or before Thursday's calls expire.
Overall option volume in the name was 16 times greater than average in the session, with calls accounting for a bullish 94% of the total.
Russell has no positions in HUN.