Options Trading News

November 27, 2012  Tue 2:45 AM CT

Rambus saw bullish option trading yesterday for the second time in about week.

Nearly 1,300 January 5.50 calls traded in a strong buying pattern yesterday, mostly for $0.13 and $0.15, according to optionMONSTER's Heat Seeker tracking system. The volume was more than 2.5 times the strike's open interest of 491 contracts at the beginning of the day, indicating new positions.

RMBS rose 1.27 percent yesterday to close at $4.80. Shares of the technology-licensing company fell to $4.01 on Nov. 16, just above its 52-week low, after repeatedly failing to break resisistance at the $5 level. But the stock gapped higher in the next session when JP Morgan upgraded it to "overweight" from "neutral" with a $7 price target.

At that time traders purchased the December 4.50 calls, which are now in the money with higher premiums. Yesterday's call buyers are looking for the stock to gain roughly 18 percent by expiration on Dec. 21. (See our Education section)

Total option volume in the name yesterday was triple its daily average. Calls outnumber puts by more than 5.5 to 1, a reflection of the session's bullish sentiment.
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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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