Options Trading News

June 19, 2014  Thu 3:16 AM CT

A long-term put sale is targeting a floor in shares of Verizon Communications well below current levels.

A block of 48,371 January 2016 33 puts was sold for $0.58 yesterday, below the listed bid price at the time, according to optionMONSTER systems. The volume was twice the previous open interest in the strike, so this is clearly a new position.

The put seller is looking for VZ to stay above $33 through expiration in early 2016. But the trader takes on the risk of having to buy shares if they fall below that price. (See our Education section)

VZ was up 0.43 percent to $49.42 yesterday. The wireless carrier has been hovering around this level for the last month, driving the 20-day historical volatility to a low of 8.6 percent. Shares were down at support at $46 in late April.
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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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