Why traders doubt Chalco will rally

By David Russell,

Shutterstock photo

Aluminum Corporation of China has been attempting to rally, but some traders have other ideas.

ACH optionMONSTER's tracking systems detected the sale of about 7,000 February 25 calls in the company, which is also known as Chalco and Chinalco. They first priced for $0.85, but premiums then fell to $0.70 and $0.65 as the selling continued. Volume was 5 times greater than open interest in the strike.

ACH fell 1.57 percent to $24.38 on Friday. It rallied 10 percent in the preceding month but struggled to break above a previous resistance level around $25 from November. The shares have apparently formed a double top at that level, which could make some chart watchers doubtful of further upside in the near term.

The company reported on Jan. 19 that it swung to a $410 million profit in 2010 from a loss the previous year. Management credited higher metal prices and said it plans to increase copper production in coming years.

Overall option volume in ACH was 33 times greater than average on Friday.

(Chart courtesy of tradeMONSTER)

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

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This article appears in: Investing Options
Referenced Stocks: ACH

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