How time is money for Murphy trader
David Russell | [email protected]
optionMONSTER's tracking systems detected the sale of about 1,800 April 57.50 calls for $5.15 and the purchase of an equal number of January 57.50 calls for $3.90. Volume was below open interest in the Januarys, indicating that an existing short position was rolled forward in time.
The investor probably owns shares in the Arkansas-based oil company and has been selling calls to earn income. He or she adjusted that position today, bringing in an additional $1.25 of premium. They're also eligible to receive the company's 2 percent annual dividend yield.
Selling calls reduces the volatility of the position and lowers the cost basis, but they're still at risk of a major decline. The trader also relinquishes earning big profits if the shares rally strongly. (See the discussion of covered calls in our Education section.)
MUR is up fractionally at $61.81 in morning trading. Total option volume is quadruple the daily average so far today.