Interesting action in the GEI Options marketCanada's option market is very small when compared to the us options market. The action in GEI over the last month or so has been dominated by three trades of some fairly serious $. Out of the just shy of 8200 Call options under contract, 8000 of them are three single buys. Thats three transactions that represent 97.5% of the market.
It started Dec 5 when a single purchase of 2000 $26 calls for March were purchased for 1.00 per contract . The stock closed at 26.20 that day. So what we had was a 2000 contracts times 1.00 price times 100 (shares per contract)....a $200k outlay. Those options are now worth $400k
Next was December 20 when again a single purchase of 2000 $28 Feb contracts...this time the call option price was 35 cents . The closing price that day was 26.93. So what he have is a bet on 2000 contracts time 35 cents times 100 that the price would be at LEAST 28.35 to break even. thats a $70 k bet....at the market today...they are breakeven....they could sell them for what they paid.
Last was a bet on Thurday last week. Again a single purchase....this time 4000 contracts for March with a $29.00 strike price .... 4000 times 20 cents times 100.... an $80k bet that the price will be at $29.20 on March 20 just to BREAKEVEN. Thats $1.80 pop expected in two months to JUST BREAK EVEN.......I dont think thats what they expect.....do you?
Some parties or is it just one.... are very convinced that GEI stock price is on the move....the underlying reason? who knows.....when very big dough comes into a very small market like Gibson options, one should take notice. who ever has laid out 350K on options expects a significant return on their money.
There was an article recently about GEI looking to REMOVE diluent so that shipping by rail would be cheaper. $6 per barrel was the number cited. I spent 10 years working for CP rail in operations. Tank cars are expensive...... you have to rent them....you pay demurrage(extra rent) when they sit. Remove the diluent, and the plan is to ship by boxcar (there are millions of those) and even to load the diluent for sea shipment in Containers. The very dense product is virtually flame proof, less dangerous to ship, and imagine the demand if the oil is delivered to the coast by rail. There are nothing but empty container ships going back to asia. Imagine how cheap shipping would become... and you get oil to tidewater without a pipleine!!!!!!!!!!!
Imagine the impact on the western Canadian basin for exploration and development if there were actually somewhere for the oil to go.
So does GEI with its recently expanding storage facilities not sit in the sweet spot going forward. I think so. Depending on earnings, a dividend increase might be a possibilty....or a buyout from someone like CPP etc. This is a great business to be in with not a great concern for the actual price of oil.
Options are a bit of a pure gamble, and should be approached as such.....bit of a different animal from regular investing....but understanding in calls, you either make a profit OR you lose all. not for the faint of heart ( I only have 10% of my funds in options) but can be quite rewarding for those with well placed faith.
Never in a registered account....if you lose the bet, there is no tax writeoff.
I presently have 20 contracts for July at $25 strike price ...not a big bet $3235 incl commision....but I am up 85% since I bought in early December when i noticed the first big buy. Its my secound round....first ones were Jan calls bought in July, sold in Dec for 60% profit to buy the July calls. I will rotate out into the next Contract series when it becomes available if I see the same blue sky.
GLTA
MC