Options Trading News

April 19, 2013  Fri 4:14 AM CT

NXP Semiconductors is down sharply ahead of its earnings report next week, but traders are hoping for a rebound.

More than 4,000 May 25 calls were purchased as premiums rose from $2.25 to $2.50 yesterday, according to optionMONSTER's Heat Seeker tracking system. The volume was well above the strike's open interest of 1,996 contracts before the session began, indicating that this is fresh buying.

NXPI fell 4.29 percent to $25.42 yesterday, dropping below its 200-day moving average. The stock closed above $29 a week ago but has been declining steadily since then.

Yesterday's call buyers are looking for NXPI to gain roughly 7 percent or more before the contracts expire in mid-May. These options, which lock in the price where traders can buy the stock no matter how high it might rise, will track the share price closely because they are already in the money. (See our Education section)

The Netherlands-based chip maker is scheduled to report first-quarter results on Tuesday before the U.S. market opens.

Total option volume in the name surpassed 9,200 contracts yesterday, more than triple its daily average for the last month. Calls outnumbered puts by 13 to 1, a reflection of the session's bullish bias.
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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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