Options Trading News

August 20, 2013  Tue 9:38 AM CT

A large trade is apparently designed to protect a long position in Bank of America as shares continue lower.

More than 24,000 each of the December 12 puts and 16 calls have changed hands in volume far above previous open interest below 250 contracts at each strike. The big blocks of 15,722 saw the 12 puts bought for their ask price of $0.22 and the calls sold for the same price, according to optionMONSTER systems.

This no-cost combination has no risk with shares between the two strike prices and is very likely a protective collar on long shares. That would cap the upside of the stock position at $16 but protect it below $12. (See our Education section)

BAC is down 0.85 percent this morning to $14.02. It hit a high of $15 almost a month ago but has been working lower since.

Total option volume in the name is just shy of 123,00 contracts, already outpacing the total daily average over the last month.
Share this article with your friends



The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

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.

View more education articles »