Options Trading News

March 6, 2014  Thu 9:39 AM CT

Bullish sentiment reigns in various trades in Teva Pharmaceuticals today as shares hit new highs.

A call spread started the action as a trader sold 3,570 March 46 calls for $5 against open interest of 10,000 and, seconds later, bought 3,570 May 46 calls for the ask price of $6.15. The previous open interest there was just 38, so that was a new position.

This is almost certainly a roll of a long-call position out in time. In-the-money calls are used to reduce exposure to the time premium while having less capital exposure than buying the underlying stock.

Ten minutes later, we see action in the puts. A block of 3,439 June 52.50 puts were bought for the ask price of $4 against open interest of 3,451. Just after that, a block of 3,470 June 55 puts were sold for the bid price of $5.45.

This second trade appears to the roll of a short-put position further up in the money. In this case, the trader is looking for TEVA to be above $55 at expiration. (See our Education section)

TEVA is up 2.13 percent to $50.88 this morning after trading as high as $51.41. These are the drug developer's highest levels since February 2011.
Share this article with your friends

Related Stories


Teva call buyers turn quick profit

September 14, 2015

The Israel-based company is trying to rebound from a level where it traded before gapping higher on plans to buy Allergan's generic-drug business.



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 »