Feeling tremors

Did anyone bother to look at whats happening in the LNG derivative market today?

"There is strong evidence that option trading volume contains information about future stock prices. Stocks with low put-call ratios outperform stocks with high put-call ratios. Partitioning option signals into components that are publicly and nonpublicly observable, we find that the economic source of this predictability is nonpublic information possessed by option traders rather than market inefficiency. We also find greater predictability for stocks with higher concentrations of informed traders and from option contracts with greater leverage."

While there are no put and call options for LNG, there are warrants - both long and short.

Over the last 3 months:

* Call warrant volumes have outnumbered the puts by 15x
* Call warrant volumes have averaged ~0.6% of the LNG headstock volumes

Today:

* The volume of calls traded represents >30% of the headstock volumes
* Considering it is a quiet day, the call volume would still be near 7% of a 'normal' days LNG volume which is HUGE compared to the average 0.6%/day

Here is the daily and rolling 5-day call volumes as % of LNG head-stock volumes... notice the unusual spike?



This is effectively a richter scale that suggests we are feeling the tremors that there is a BIG move coming up in the upward direction for LNG.

As an aside, while new reported gross short sales continue to come through net short interest is reducing...


Seatbelts on!!