CenturyLink volumes surge after selloff
David Russell | [email protected]
More than 42,000 contracts traded in the name yesterday, compared with just 10,500 in an average session. Activity was scattered across the board, with the largest single transaction occurring in the March 35 calls and the March 37s.
Blocks of 4,000 each simultaneously changed hands in both, with the 35s sold for $1.10 and the 37s bought for $0.65. Volume was below previous open interest at the lower strike, which suggests that an existing long position was rolled from one contract to the other.
The investor probably owned the 35s previously and made money as the stock went up. Adjusting the position let him or her recover $0.45 of capital, while keeping them in the game for further upside. (See our Education section for more on how options can be used to manage positions.)
CTL rose 3.39 percent to $34.14 yesterday but came into the session down 20 percent in the last week. Most of that drop occurred on Feb. 14 when the company's earnings and revenue missed expectations. Management also lowered the quarterly dividend.
While the drop was dramatic, shares managed to hold the same level where they bottomed in late 2011, which could be leading some chart watchers to think that they're at support and due for a bounce.
Disclosure: I own CTL shares.