Options Trading News

January 8, 2013  Tue 3:47 AM CT

Gold Fields has been struggling, and one investor wants to put a position out of its misery.

optionMONSTER's tracking programs detected the purchase of 24,578 January 14 calls for $0.03 and the sale of an equal number of April 13 calls for $0.35. Volume was below open interest in the January options, indicating that an existing short position was closed and moved from one contract to the other.

The investor probably owns shares in the South African gold miner, which has been trending lower since April 2011. He or she would have previously sold the January 14s to earn income while holding the stock and yesterday adjusted the trade to the lower strike.

The trader collected a credit of $0.32 in the process while lowering by $1 the level at which the stock must be sold. In other words, the investor doesn't expect a rally anytime soon. (See our Education section)

GFI fell 1.39 percent to $12.04 yesterday and is down 23 percent in the last year. The stock faces potential resistance at or below the $13 level, which may explain why the investor wants to be short calls at that level.

Total option volume was 22 times greater than average in the session.
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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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