Options Trading News

July 10, 2013  Wed 4:45 AM CT

Air Products and Chemicals is back near two-year highs and drawing bullish option activity ahead of its earnings report in less than two weeks.

More than 3,600 August 100 calls traded in a strong buying pattern yesterday as premiums more than doubled from $0.60 to $1.30, according to optionMONSTER's Heat Seeker tracking system. The volume was triple the open interest in the strike before the session began, indicating that these are new positions.

APD rose 3.91 percent to $95.96 yesterday, breaking back above its 50-day moving average. The industrial-gas provider had declined after hitting a two-year high of $97.12 on June 19 but bounced off the $91 level this week. The company's next quarterly results are scheduled for July 23.

Yesterday's long calls lock in the price where traders can buy the stock no matter how high it might rise. These contracts are looking for APD to rally above $100 by mid-August but will expire worthless if shares remain below that level. (See our Education section)

Total option volume in APD topped 14,600 contracts yesterday, 5.5 times its daily average. Overall calls outnumbered puts by 4 to 1.
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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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