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January 17, 2013  Thu 3:16 AM CT

DD: SEE CHART GET CHAIN FIND STRATEGIES
DuPont has been climbing, and one investor wants to give the stock more room to run.

optionMONSTER's tracking programs detected the purchase of about 5,000 January 45 calls for $0.95 and the sale of a matching number of February 47 calls for $0.37. Volume was below open interest in the January contracts, indicating that an existing short position was closed and rolled forward in time.

The investor probably owns shares in the chemical giant and sold the options as part of a covered call strategy. He or she is adjusting that position to increase by $2 the price at which the stock must be sold. The trader paid a $0.58 for that additional upside and now must remain in the position for another month.

DD fell 0.61 percent to $45.97 yesterday but is up 10 percent in the last two months. Given that the January contracts are in the money, the investor would have been forced out of the trade at expiration tomorrow if the short calls hadn't been rolled forward. Rolling up and out also keeps them in the game for DD's earnings release next Tuesday. (See our Education section for more on how calls and puts can be used to manage positions.)

Total option volume was almost triple the daily average in the name yesterday.
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So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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