Mother of all Volume Spikes for Molycorp (MCP)

Posted in General, Options, pre-market 
February 11th, 2011

Molycorp, Inc. (NYSE: MCP) is going to have the mother of all volume spikes this Friday.  The company has priced a $180 million offering of 5.50% mandatory convertible preferred stock being sold by the company AND it priced 13,500,000 shares of common stock at a price per share of $50.00 which are being sold by the shareholders.  The $50.00 pricing is against a close of $51.15 on Thursday and is nearly a 10% discount of this week’s highs above $55.00.

Here is what you need to know… The dilution has been expected for quite some time and the details of this offering became much more clear at the start of this week.  We do not agree with necessarily every aspect of this call, but a fresh technical analysis was offered by INO in Molycorp and silver versus gold.

Shares are down 1.5% at $50.36 in the pre-market trading and we have seen more than 275,000 shares trade hands as of only 8:07 AM EST with nearly 90 minutes remaining in the pre-market.

Record volume days were as follows:

  • January 24 at 11.35 million shares, $46.82 close;
  • January 6 at 12.56 million, $52.86 close;
  • January 4 at 14.395 million shares, $61.80 close;
  • January 3 at 16.9 million shares, $57.50 close;
  • December 28 at 16.67 million shares, $46.18 close;
  • October 28 at 16.01 million shares; $33.89 close;
  • IPO date of July 29 at 10.1 million shares; $12.85 close.

Today is very likely to challenge the record for an all-time high in share volume.  Oddly enough, not a single option strike price in Feb-2011 nor in March-2011 has an open interest of more than 10,000 contracts.

JON C. OGG

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