What Gives With International Paper (IP)?

Discussion in 'Options' started by da-net, May 11, 2005.

  1. da-net

    da-net

    Just recieved an alert from Schaeffers Investment Research about the intraday OTM June options.

    "Tuesday, particularly on the June 35 call strike (IP FG). More than 5,000 contracts crossed the tape on this out-of-the-money position, the majority of which translated as new open interest this morning. The volume largely consisted of two large block trades, which were executed near the ask price shortly after 11:00 a.m. yesterday."

    I looked at I Watch and noticed that there has been quite a bit of institution buying for the last month. The top holders have been net buyers. No insider buying. Raging Bulll message board does not have any news or postings of relavance. And the chart still looks pretty bad. Does anyone know anything?
     
  2. We saw this done on HON last week. As far as I can tell it looks like a pump and dump -- but that's just my opinion.
     
  3. da-net

    da-net

    Thanks for the input. I went to look at the same info for HON, but it has institution selling where IP does not. The net buying by institutions (chart attached) for both looks about even though.
     
  4. Trajan

    Trajan

    This isn't option related, but I'm surprised at where this stock is trading. Thi stock never really rallied that much over the past few years which surprised me as I thought it would have because of the inflationary bump we got.
     
  5. da-net

    da-net

    That is my point exactly! This stock has not been this low since March 2003. Why are the institutions net buying of the stock over the last thirty days? 5000 OTM calls purchased in two trades within minutes implies someone (institution, etc) with pretty deep pockets is the buyer since the options were "purchased" near the offer and were a new position (OI). This new position cost about $160,000.00 to put on.

    Why OTM calls for June? If you wanted to "sucker" the market into believing the stock was about to run immediately, would you not use the front month ATM/ITM calls to get the action going in because of time decay?
     
  6. Trajan

    Trajan

    This stock is getting hammered today. It's back to its lows of the bear market.
     
  7. da-net

    da-net

    YES it is. Do you think it is about done on the downside or do we have more left to go?

    This keeps getting more and more curious! Attached is todays I Watch info. The only meaningful news was from after the market close yesterday.

    "International Paper Executive Vice President and Chief Financial Officer Marianne Parrs will speak at the Goldman Sachs Basic Materials Conference in New York City on Monday, May 16 at 8:45 am EDT."

    What is your take on what is unfolding?...Is It sector or Industry Rotation? Or is there something larger going on here? Or is it the transfer to "Smart Money Hands"?
     
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  8. They are buying the out of the money calls because they are shorting the stock. Look at daily and notice where the last pivot is.

    John
     
  9. Problem with these 'scanners' that pick up unusual activity is that they also pick up activity in crap stocks. IP is a dog. It doesn't move. Maybe only good for option 'writers', not buyers. Go for what moves, not some dumb scan.
     
  10. Trajan

    Trajan

    Risktaker mentioned a problem with playing a stock like IP, it can take a while to play out. Your capital can be tied up unproductively.

    I wonder if this selloff doesn't have as much to do with the dollar rally as anything else. Maybe if it rallies further estimates will have to be taken down?

    I don't see any significant option activity today either. Looks like a panic selloff probably, as that certain person with a T.V. show which gives me a headache to watch says much of the selloff today was.

    Looking at the options chain, I can't say anything excites me. If you're a put seller, maybe sell a June 30p or July.
     
    #10     May 13, 2005