PM, back trading at its original spin-off price of a year and a half ago is my next long(er) term hold as we enter 2010. Not because I have any vested interest in tobacco or anything…it’s purely a technical trade, while following some “smart(?)” money.
The “smart(?)” money popped up yesterday in the Mar’10 48. call straddle, purchasing a bundle of 2500 (so 5k total contracts) at about ($2.50 + $1.7/1.75) each – so about a million greenbacks invested in a 10% move in the next 2.5 months. Breakevens at March expiration are $43.79 and $52.20.
And seeing as how PM’s been consolidating nicely in a picture-perfect triangle over November/December, I’d say that a breakout, either way, is imminent. The absolutely flat IV% of the past week, the rock-bottom that the ATR(5) is hitting, and the mellow Stoch’s that have been hugging the 50 for a month are all absolutely ripe for some “action.”
