Options Trading News

September 19, 2013  Thu 4:45 AM CT

Traders are betting that Cliffs Natural Resources will break out of its recent range.

More than 14,400 November 28 calls traded in a heavy buying pattern yesterday as premiums rose from $0.49 to $0.76, including a single print of 8,942 that went for $0.60, according to optionMONSTER's Heat Seeker tracking system. These are clearly new positions, as open interest in the strike was just 333 contracts before the session began.

These long calls lock in the price where traders can buy the stock no matter how far it might climb by mid-November. They could be sold earlier at a profit if premiums rally before then, but the contracts will expire worthless if shares remain below the $28 strike price. (See our Education section)

CLF gained 4.68 percent yesterday to close at $23.49, approaching its 200-day moving average. The mining and natural-resources company has been trading sideways for the last month, mostly between $21 and $24, but rose yesterday along with many other names in the materials sector following the Fed announcement.

Total option volume in CLF was just shy of 59,000 contracts yesterday, quadruple its daily average for the last month. Overall calls outnumbered puts by more than 3 to 1.
Share this article with your friends


Premium Services

Archived Webinar

Education & Strategy

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.

View more education articles »