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Unusual Put Sales See Value in Small Cap Bio-Diesel Play Future Fuels (FF)

by | May 20, 2021

Future Fuels (FF) a small cap with interesting activity recently as 2,250 November $15 puts have sold to open seeing limited downside in shares while 1500 November $17.50 short calls as part of a buy-write remain in OI as well. FF shares have traded in a well-defined range the past decade with lower support near $10 and upper resistance near $18.50, currently working on a strong monthly reversal candle. FF manufactures diversified chemical products, bio-based fuel products, and bio-based specialty chemical products. The biofuels business segment began in 2005 and primarily produces and sells biodiesel.  Biodiesel is a renewable energy product consisting of mono-alkyl esters of fatty acids. The mono-alkyl esters are typically produced from vegetable oil, fat, or grease feedstocks. In late December 2019, the BTC was retroactively reinstated from its expiry on January 1, 2018 and extended through December 31, 2022. Based on analysis from industry analysts, the biodiesel industry is entering a new era of transition to alternative feedstocks, emerging technologies, and revised government policies favoring sustainable feedstocks and fuels. The chemicals segment manufactures diversified chemical products that are sold to third party customers in two components, custom manufacturing and performance chemicals. FF currently has a $580M market cap with shares trading 8.7X EBITDA and has $260M in cash with no debt and a 1.79% dividend yield. FF declared a $2.50/share special cash dividend in May.