Rentech Nitrogen Partners has been a roller-coaster ride, but
now traders are betting that the next swing will be higher.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of more than 3,000 April 20 calls yesterday, most of which
priced for $1.90 to $2.10. Volume slightly exceeded the previous
open interest, so it appears that new money was put to work.
lock in the price where shares can be purchased in the fertilizer
company. Holders can now cheaply position for gains and stand to
enjoy significant leverage in a rally. For instance, a 43 percent
move in the stock will drive up the options by 400 percent. (See
RNF rose 5.66 percent to $21.10 yesterday. It was spun off from
Rentech as a limited partnership in late 2011 for $20, rallied all
the way to $49.18 early last year, and bottomed out at $16.90 in
December. Yesterday's option activity reflects a belief that shares
will continue to rebound.
More than 5,000 contracts traded in the session, compared with 500
on average for the last month. Overall calls outnumbered puts by a
bullish 11-to-1 ratio.
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