Is LyondellBasell poised to break out?

By David Russell,

Shutterstock photo

LyondellBasell Industries is pausing at a key level, and the bulls are looking for a breakout.

optionMONSTER's Heat Seeker tracking program detected the purchase of 2,250 September 45 calls for $3.50 and the sale of an equal number of September 55 calls for $0.80. Volume was more than 11 times open interest at both strikes.

This bullish call spread cost $2.70 to open and will earn a maximum profit of 270 percent if the chemical maker closes at or above $55 on expiration. (See our Education section)

LYB rose 3.91 percent to $42.83 yesterday and is up 31 percent so far this year. The stock is attempting to hold the same price range where it peaked in 2011, and some traders may expect a strong rally if resistance gives way.

The company emerged from bankruptcy in 2010 and has continued to repair its balance sheet since then. It announced a big debt buyback in October, and its credit rating was raised from "junk" to "investment grade" by Standard & Poor's last month.

Overall option volume was nearly 7 times greater than average yesterday, with calls outnumbering puts by 4 to 1, according to the Heat Seeker.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: LYB

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