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Momentum trade in LyondellBasell

By: optionMONSTER
Posted: 5/5/2011 1:38:00 AM
Referenced Stocks: LYB

LyondellBasell Industries has been on a massive run, and the bulls keep coming back for more.

optionMONSTER's Heat Seeker tracking system detected the purchase of 9,900 May 43 calls for $1.30 and the sale of an equal number of May 46 calls for $0.25, resulting in a net debit of $1.05.

This bullish call spread will earn a maximum profit of 186 percent if the Dutch plastics maker closes at or above $46 on expiration.

LYB fell 3.9 percent to $42.83 yesterday. It emerged from bankruptcy one year ago, edged lower into July, and then proceeded to more than triple by earlier this week when earnings crushed forecasts.

Chemical stocks have been one of the strongest sectors in the market this year, and yesterday's spread in LYB was apparently a momentum trade based on an expectation that the bullish trend will continue.

Overall option volume in the stock was 4 times greater than average in the session, with calls accounting for more than 80 percent of the overall activity.