Options Trading News

December 27, 2012  Thu 9:52 AM CT

A large call trade tops today's option activity in the Market Vectors Junior Gold Miners Fund even as it trades at five-month lows.

More than 18,000 GDXJ options have traded so far today--about twice its daily average--and almost all of the volume is in one trade.

optionMONSTER systems show that a trader sold 7,858 January 19.63 calls for $0.60 against open interest of more than 11,000 contracts. At the same time, he or she bought 7,858 February 19 calls for the ask price of $1.30 in volume that far exceeded that strike's open interest of 573, so this is a new position.

This appears to be a trader closing the January calls, which expire in three weeks, and rolling the position forward by a month. He or she is paying a premium to get more time and greater delta, or exposure to gains. (See our Education section)

The GDXJ is up fractionally on the day, continuing to trade at its lowest levels since the start of August. Shares had climbed up to resistance at $25 but have been trending lower since.
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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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