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IBDvalueinvestin (99.64)

Lumber closes at limit up, that has been the case lately in futures of lumber.

Recs

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December 02, 2009 – Comments (1) | RELATED TICKERS: TIN.DL2 , PKG , IP

Who benefits from higher lumber prices? Paper , package & pulp stocks because they can command higher prices due to higher lumber prices. Which stocks? TIN, PKG, & IP for starters, others that could benefit as well CLW & BZ

 

Temple-Inland ( TIN - news - people ): Previously falling prices of lumber came to a crowd-drawing end in the Chicago futures pits last week when the January lumber contract closed limit-up. Buyers couldn't get in as the market was pushed through the roof. It would appear that neglecting supply during a recession can have adverse consequences when signs of demand return. Analysts have been swift to pinpoint companies whose prospects might improve as a result of rising lumber, paper and pulp prices. That's possibly behind a 6% surge in shares at paper manufacturer Temple-Inland Tuesday, which Tuesday hit a new 52-week high of $19.44.

Options activity was noteworthy due to a block of 3,500 call options at the January expiration. Overall volume of 9,230 contracts Tuesday is seven times the daily average typical on Temple. It appears that Tuesday's activity is the work of an option trader who turned bullish prematurely back in October when its shares were just above $17 each. The investor watched his stake in the January 17.5 call options turn sour despite an ongoing share price recovery, which has perhaps come a little too late to benefit. The sale at $2.10 Tuesday suggests this investor is only breaking even, despite a subsequent share price pop of 12%. The time decay appears to have harmed the trade in this case, which goes to prove the need for pretty good timing for option traders

Link to article

 

1 Comments – Post Your Own

#1) On December 02, 2009 at 2:30 PM, brickcityman (< 20) wrote:

Any chance this might have an effect on recycled paper?  As in making it more attractive (at least in the near term)?

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