Options Trading News

February 19, 2013  Tue 5:16 AM CT

Traders are betting that Teradata will rebound sharply in the next month.

More than 2,300 March 70 calls traded in a strong buying pattern on Friday as premiums rose from $0.20 to $0.35, according to optionMONSTER's Heat Seeker program. The volume was above the strike's open interest at the beginning of the day, indicating that these are new positions.

The long calls, which lock in the price where traders can buy shares, are looking for TDC to gain roughly 12 percent or more by mid-March. The options could be sold at a profit before then if their premiums rise with any rally, but they will expire worthless if the stock is below the $70 strike price at that time. (See our Education section)

TDC rose 0.71 percent to $62.59 on Friday. The data-warehousing company gapped down from the $66 level on Feb. 7 after issuing guidance that was below analysts' expectations, and shares have been trading around the $62 since then.

Only 100 puts traded in the entire session, a reflection of the day's bullish sentiment. The company is scheduled to present at the Morgan Stanley Technology, Media & Telecom Conference on Feb. 26.
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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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