Options Trading News

June 27, 2012  Wed 9:21 AM CT

Cheniere Energy is holding support, but one trader sees little upside.

LNG is up fractionally this morning, trading at $12.42. Shares of the liquefied natural-gas company are down from a 52-week high of $18.92 in late April but have largely held the $12 level for the last month.

optionMONSTER's systems show that a trader sold 3,000 December 15 calls for the ask price of $1.45. This outpaced the open interest, so it is a new position.

If the calls were sold naked, it would have an initial bearish bias. That position would have significant risk if LNG runs higher through the end of the year. The options could also have been traded against long shares as a covered call, which would be bullish up to the strike price but give up any gains above that level. (See our Education section)
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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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