FWLT - Oct Call Buyers on Promising News; Buyout Rumors Surface

Discussion in 'Options' started by livevol_ophir, Sep 28, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    FWLT is trading $24.67, up 3.8%.

    <img src="http://3.bp.blogspot.com/_hMry1m7UF10/TKIuolOgP_I/AAAAAAAAFAs/eWU9bhIb_Wc/s1600/fwlt_summary.gif">

    The news from Yahoo! Finance:
    8:15AM Foster Wheeler obtains encouraging results from initial PetroAlgae biomass testing (FWLT) 23.76

    Buyout rumors are surfacing...

    The company has traded over 15,000 options on total daily average option volume of just 2,987. All but 915 contracts have been calls. The action is in the Oct 25 and 26 calls where over 10,500 have traded. I believe the interest to be substantially buyer initiated. The Stats Tab and Day's biggest trades snapshots are included (<a href="http://livevol.blogspot.com/2010/09/fwlt.html">in the article</a>).

    <img src="http://2.bp.blogspot.com/_hMry1m7UF10/TKIurNtfElI/AAAAAAAAFA8/ch4xxVeiu4s/s1600/fwlt_stats.gif">

    The Options Tab (<a href="http://livevol.blogspot.com/2010/09/fwlt.html">in the article</a>) illustrates that the calls in both lines are mostly opening (trade volume &gt;&gt; OI).

    We can also see that Oct vol is up while all other months are down. This leads me to believe there is substantial buying interest.

    The Skew Tab snap (<a href="http://livevol.blogspot.com/2010/09/fwlt.html">in the article</a>) illustrates the vols by strike by month.

    I've highlighted the calls in play. Interesting to note that the skew hasn't budged - flat and consistent throughout.

    Finally, the Charts Tab (6 months) is below (<a href="http://livevol.blogspot.com/2010/09/fwlt.html">in the article</a>). The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink). The yellow shaded area at the very bottom is the IV30™ vs. the HV20™ vol difference.

    We can see that the IV30™ is caught in between the short term historical (HV20™) and long term historical (HV180™). We can also see the FWLT has been much higher, up to over $32 in late April. The 52 wk. range is [$23.33, $35.01].

    This is trade analysis, not a recommendation.

    Details, trades, prices, vols, skews, charts here:

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  2. livevol_ophir

    livevol_ophir ET Sponsor

    Here's the day tick chart. Stock on a steady climb.

    <img src="http://1.bp.blogspot.com/_hMry1m7UF10/TKI4qrudy_I/AAAAAAAAFBE/F1FPErH4PLY/s1600/fwlt_tick_chart.gif">