Shares in chemical producer Air Products & Chemicals Inc. (Ticker: APD) are up roughly 20% since July of last year coinciding with an announcement from activist investor and hedge fund manager Bill Ackman that Pershing Square Capital Management L.P. had taken a 9.8% stake in the company. A large trade in far out of the money call options on the stock initiated this morning suggests one trader may be positioning for the rally in APD to continue during the next ten months. Shares in Air Products are off slightly today, down 0.50% at present to trade at $119.92 as of midday in New York.
A large block of 9,000 of the Jan ’15 $135 strike calls appear to have been purchased just after 10:20 a.m. EDT at a premium of $3.90 per contract. The trade is the single-largest print in APD options today and is sizable in relation to the stock’s total open interest level of 39,216 positions. The trade makes money at expiration if shares in Air Products rally more than 15% over the current level to exceed the effective breakeven price of $138.90. APD trades just 3.0% below an all-time high of $123.60 reached Thursday of last week.
