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October 8, 2013  Tue 3:16 AM CT

OHI: SEE CHART GET CHAIN FIND STRATEGIES
One investor is passing the time in Omega Healthcare as investors worry about the budget standoff in Washington.

optionMONSTER's trade scanners detected the purchase of about 1,750 October 30 calls for $0.90 and the sale of an equal number of November 30 calls for $1.10. Volume was below open interest in the nearer-dated contracts, indicating that an existing short position was closed and rolled forward in time.

The investor probably owns shares in the real-estate investment trust and had sold the options as part of covered-call strategy. The adjustment allows the trader to collect an incremental $0.20 of income and stay in the trade for an additional month. It also keeps him or her from being forced to exit the position at the end of next week when the October contracts expire. (See our Education section)

OHI rose 0.39 percent to $30.52 yesterday. It rallied strongly between November and May, fell through early September, and has been working its way higher since.

The stock pays a dividend yield of 6 percent, which the investor receives in addition to the premium collected from selling the calls.

Total option volume was 10 times greater than average in the session.
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As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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