Income is key to call trade in Sysco
David Russell | [email protected]
optionMONSTER's tracking programs detected the purchase of about 1,050 January 30 calls for $1.58 and the sale of an equal number of August 31 calls for $1.53. Volume was below open interest in the January contracts but not the August options, which indicates that an existing short position was closed and rolled into next summer.
SYY rose 0.09 percent to $31.71 yesterday, so those calls are in the money. Selling them creates a position more akin to a bond trade than a stock play because it reduces volatility and caps gains.
The investor probably owns SYY shares, letting him or her collect its 3.5 percent annualized dividend. Adjusting the short calls cost about $0.05, but the trader now has the right to collect an an additional $1 of upside on the stock while agreeing to stay in the position for another seven months. (See our Education section for more on how options can be used to turn time into money.)
Later in the session, an additional 2,200 August 31 calls were sold for $1.60. It's not clear whether the transactions were related.
More than 8,900 contracts traded in the name yesterday, almost 13 times the normal daily average.