Sealed Air Corp is at an All-Time High

Sealed Air Corp is at an All-Time High
August 18, 2015

 
The packagind and container company, Sealed Air Corp (NYSE:SEE) was one of the companies that tried to prepare for a stronger dollar according to their official April statement. It seems that the management team was on the right track with that decision because the US dollar is on the rise since April, and the dollar index is also at a high.

These kind of moves are only normal for companies exposed to the worldwide market. Hedging risks offers the possibility to weather tough times and decisions that might come into play.

As a result of the above, the SEE stock is trading at an all times high and Sealed Air broke the $50/share range. However, strong headwinds are ahead as 29% of sales are coming from a market that is not growing like it used to, and the recent Yuan devaluation story makes the case for more trouble ahead.

The strong dollar has been a problem for companies that earn their incomes on a worldwide basis as what the Federal Reserve of the United States is doing with the rates is crucial. The PBOC (People’s Bank of China) devalued its currency, and the effect is almost like the US national bank, the Federal Reserve, has acting on monetary policy.

This proves more and more that national central banks are interconnected, and that one monetary policy that works in one part of the world will most likely work in others as well. The best example we have is the QE (quantitative easing) programs that are being run from the US, Japan, Europe and the UK.

The case of SEE is really intriguing now as the $50 level has been reached, and the psychological effect is not there anymore. Round numbers have this effect on most markets and SEE should be no different.

I am favoring a put option on the SEE stock price but the striking price and the investment should be split in two parts: one from current 55$/share level and one from 49.50$ level as basically we’re selling weakness if market breaks the 50$/share range.

Expiration date for both options should be end of August for the first one and one month for the second one after the 49.50$/share levels is being hit.

I would say that the market is going to consolidate around the 50$/share mark until the September Fed meeting as no one is really taking a decision until the possible rate hike expectations are being confirmed/infirmed.

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Andrew Wright

Prior to founding tradersasset.com in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.


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