by Houghton and Atkeson 06/27/08
Headwaters Inc. (HW) describes itself as an alternative energy company. It is the largest provider of technology and chemical regents to the coal based synthetic fuels industry -- the clean coal marketplace.
With oil at $140, its coal business must be on fire. Unfortunately, Headwater also has some exposure to the construction materials market as it makes stone veneer, concrete blocks and bricks.
As a result, HW is trading at levels last seen in 2001. Options investors have bought 1,000 HW Nov 10 Calls (HWKB) that are in-the-money today. The high delta of these calls appears to indicate a directionally bullish opinion. Calls on HW typically average around 200 contracts per day, so this increase is worth asking the question: What's coming to 'Head'waters?
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