By Jud Pyle, CFA, chief investment strategist for the Options News Network
shares are trading up 61 cents to $86.14, the day after the company rejected an extended offer acceptance deadline from
, describing the offer as "further away from being compelling than it ever has been." We saw several investors take this as an opportunity to express bullishness and boost later-dated call volume.
At approximately 2:30 p.m. EST, we saw several blocks of the way-out-of-the-money May 105 calls cross the tape at the ask price of $2.80, indicating investors bought these options. These calls traded more than 9,500 times vs. open interest of 238 contracts, which suggests traders bought them to open. The May 105 calls gained 30 cents on the day, and have an implied volatility of 38.
Call buyers will make money if CF shares close higher than $107.80 at May expiration, but investors could choose to take profits and sell the options if the stock pops up significantly throughout the next five months.
CF shares are already trading close to their 52-week high of $95.13, but it's interesting that at least one investor is looking for 25% more upside in the later term. Either Agrium has to come back to the table with a higher-priced deal, or shares need to continue to rally on their own on the strength of agriculture stocks.
Jud Pyle is the chief investment strategist for Options News Network (www.ONN.tv) and the portfolio manager of TheStreet.com Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for TheStreet.com.
Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."