Options Trading News

November 23, 2012  Fri 10:45 AM CT


Lexmark International has been rebounding since the summer, and one investor thinks it will remain strong.

optionMONSTER's trade scanners detected the purchase of 1,000 January 22 calls for $3.60 and the sale of an equal number of April 23 calls for $3.50. Volume was below open interest in the 22s, so it appears that an existing position was rolled forward in time.

LXK rose 5.04 percent to $25.44. The maker of computer printers languished for years, but announced in August that it would exit the ailing inkjet-printer business. Two months later, earnings and revenue both exceeded consensus estimates.

Today's calls are in the money, so it appears that the investor owns the stock and is using the options to craft a low-risk income trade. He or she paid $0.10 to roll the position, and now have the right to make an additional $1 of upside on the share price. They're also collecting LXK's 5 percent annual dividend yield. See our Education Section for more on how options can be used to turn time into money.

Total option volume is quadruple the daily average in the name so far today.

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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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