Options Trading News

May 2, 2014  Fri 12:20 PM CT

EQT has been rallying on the heels of a strong quarterly report, and bullish option activity continues to build in the name.

optionMONSTER's Heat Seeker monitoring program detected the purchase of more than 2,600 June 105 calls, most of which priced for $7.40 to $8.60. Volume was more than 4 times the previous open interest in the strike, indicating that new money was put to work.

Long calls lock in the price where a stock can be purchased, providing exposure to a rally with limited risk. Today's contracts are also in the money, so they will closely track movements in the underlying share price. It's a cheap way to get leverage on a stock already in the triple digits. (See our Education section)

EQT is up 0.78 percent to $110.10 in afternoon trading and has risen 23 percent this year as investors have flocked to companies in the domestic-energy space. The natural-gas producer has also been recommended on our proprietary Market Action webinar several times.

Quarterly results on April 24 also crushed expectations on the top and bottom lines. Shares gapped higher on the news but pulled back, and now the bulls are looking for the uptrend to continue.

Overall option volume is already 6 times higher than its daily average so far in the session, with calls outnumbering puts by more than 7 to 1.
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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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