Options Trading News

February 12, 2013  Tue 3:47 AM CT

Investors have high hopes for Omnicom, which is parked near an all-time high before this morning's quarterly report.

optionMONSTER's Heat Seeker trade scanner detected the purchase of about 4,400 February 55 calls, most of which priced for $0.95 to $1.05. Volume was more than 7 times previous open interest at the strike.

Those long calls lock in a $55 entry price on the advertising firm through the end of the week, no matter how high they may go. The investor has now ensured that he or she will profit if the report is strong and OMC rallies, while limiting potential losses. The options risk only about $1 if the stock drops, much less than owning shares directly. (See our Education section for more on how options can be used to manage positions.)

OMC rose 0.25 percent to $55.36 yesterday and is up 17 percent in the last three months. Investors shrugged off a weak earnings report in October, hoping for better results in future quarters. Other companies linked to advertising have recently beaten expectations.

Total option volume was 18 times greater than average, according to the Heat Seeker. Calls accounted for a bullish 87 percent of activity in the name.
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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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