Options Trading News

September 3, 2013  Tue 4:06 AM CT


Traders want to get a bang from gunpowder stock Olin.

optionMONSTER's tracking programs detected unusual activity in the maker of Winchester ammunition. The first big blocks hit in the October 25 calls, with investors paying $0.20. More than 1,400 would trade against previous open interest of just 10 contracts.

Calls lock in the price where shares can be purchased, giving them potentially significant leverage to a rally. And that's exactly what happened, because OLN inched higher and those contracts almost doubled to $0.40. (See our Education Section.)

Later in the session, buyers snapped up more than 2,000 November 25 calls, this time pushing premiums from $0.40 to $0.55. Volume also surpassed previous open interest of 1,468 contracts, indicating that new money was put to work on the long side.

OLN rose 0.13 percent to $23.10, and is trying to work its way higher from the bottom of its recent trading range. Total option volume was almost 10 times greater than average in the session, with calls outnumbering puts by a bullish 31-to-1 ratio.

(A version of this post appeared on InsideOptions Pro on Friday.)

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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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