Options Trading News

August 21, 2013  Wed 4:14 AM CT

Ericsson has been trading sideways since spring, but one investor is holding out hope for a rally by early next year.

optionMONSTER's Heat Seeker system shows that a trader sold 8,000 October 13 calls for $0.20 and $0.15 while buying 5,000 January 13 calls for $0.55. Volume was below previous open interest in the October strike but above it in the January contracts.

This indicates that the trader is selling the nearer-dated calls and rolling the position forward by three months, essentially buying more time for the upside play to work. The new long calls are looking for ERIC to rally by mid-January but could expire worthless if shares remain below $13. (See our Education section)

ERIC rose 0.25 percent yesterday to close at $12.17. The Swedish cellphone and telecom-equipment company has erased all of its losses since gapping lower after earnings results on July 17, but it has been unable to break through resistance at the $12.30 level that goes back to mid-May. Shares have not traded above $13 since March.

Total option volume in the name was just shy of 18,000 contracts yesterday, nearly 31 times its daily average for the last month. Overall calls outnumbered puts by more than 16 to 1.
Share this article with your friends

Related Stories


Is Ericsson heading lower again?

January 22, 2016

Someone thinks the stock's long-term bearish momentum will overwhelm today's pop higher.


Premium Services

Upcoming Webinar:

Using Options For Income


Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »