Options Trading News

February 6, 2013  Wed 9:13 AM CT

Applied Materials is pulling back from yesterday's highs, but one trader is betting that the chip-equipment maker will hold current levels in coming months.
optionMONSTER systems detected the sale of 3,000 April 13 puts for the bid price of $0.46 today. The volume was more than double the strike's open interest of 1,701 contracts before the session began, indicating new activity.

The put selling is based on the thesis that AMAT will remain above $13 through that April expiration. The trader is willing to buy shares if they fall below that price and they are assigned. (See our Education section)

AMAT is down 0.86 percent to $13.31 this morning, a day after posting its highest close since the middle of 2011. Shares have run up from support at $10 since the middle of November and broke through resistance at $13 just last week.
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The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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