Options Trading News

November 29, 2013  Fri 9:32 AM CT

Yahoo hit another new high today, and traders are positioning for even more gains in coming weeks.

About 3,000 November Weekly 36.50 calls that expire today were sold for $0.80 to $0.44, while roughly the same number of December Weekly 37 calls expiring on Dec. 6 were bought for  $0.52 to $0.76, according to optionMONSTER's Heat Seeker tracking system. Volume was below previous open interest in the November contracts but above it in the December strike, indicating that long positions are being rolled forward.

The traders are essentially buying another week for YHOO to rally further by the end of next week. But the new long calls, which will track the share price closely because they are in the money, will lose value quickly if the stock loses its upward momentum.  (See our Education section)

YHOO is up 0.57 percent to $37.17 in morning trading after hitting $37.35 a bit earlier, its highest price since January 2006. The Internet stock has been trending steadily higher for the last year, nearly doubling in that time.

Overall Yahoo calls are outpacing puts by more than 2 to 1 so far today.
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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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