Options Trading News

December 28, 2012  Fri 2:45 AM CT

One investor is milking income from food distributor Sysco.

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.
Share this article with your friends

Related Stories


What's behind put selling in Sysco

November 18, 2015

The food distributor, which fell after revenues missed forecasts on Nov. 2, but traders are looking for the stock to hold its ground well into 2016.


Premium Services

Education & Strategy

The art of trading

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.

View more education articles »