analysts view

Here is one analysts view on RIO (nb not the resource sector but just this one company) :

RIO: I was in the throes of putting out a trading note on this one yesterday… except due to my exceptionally slow typing, I was underable to finish it. And therefore, it makes an appearance here today. The call? RIO IS A (TRADING) SELL AT THESE LEVELS. THE WARRANT YOU WANT TO HAVE A LOOK AT RIOWZZ… Why? The first reason is technical: with a tight stoppie at $39.80, buy puts as close as you can to $39.50/60. I’m no technical expert, but for a trade, this looks to be one big double top forming (and thus, the reason for the pretty bear picture on the chart below) Secondly, conjecture suggests that Rio could be in the market for WMR. Irrespective of whether we agree with this or not (and we think it’s unlikely Rio bid WMR by the way), the market being as irrational as it is might choose to sell Rio on the back of the talk. Even if it does not, there is a free put if Rio does decide that WMR at these levels is good value… Thirdly, the switch: we’ve been hearing anecdotal evidence that instos are not that keen on chasing RIO at these levels and prefer playing in BHP (which we’ve argued below as a fantastic buy) over RIO. Not exactly sure why, but I am sure that the above two points would play some part in it.

For the LONG PUT: RIOWZZ (Dec, $40, PUT) DELTA –55
One of the highest delta, deepest in the money puts in the market