Large Call Rollout In APD Bets On $165+ By September

Air Products and Chemicals shares have been trading in a nice uptrending channel for nearly two years. However, for those looking to buy APD it is not an ideal time right now. The stock is now near the top of the channel ( RSI near highs as well) and could be setting up for a pullback to mid to high $140's in the coming weeks (major support at the 40-week SMA ).

On Friday, someone rolled out 2,460 June $145 calls ($13.70 credit) into 2,460 Sep $155 calls ($9.50 debit). He/she is taking some profits on the recent 5 week rally, but still thinks APD can rise north of $165 by September options expiration. 5,010 calls traded vs the daily average of just 976 calls.

Shares trade at a P/E ratio of 21.27x (Sep16 estimates) with 12.9% EPS growth, P/S ratio of 3.21x, and a P/B ratio of 4.57x. Revenue is likely to grow in the low single digits this year and accelerate to 6%+ in FY16. Hedge fund manager, Bill Ackman, owns more than 20M shares (nearly a 10% stake) and believes the stock price could be worth more than $200 under the right management.


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