Options Trading News

April 10, 2013  Wed 5:16 AM CT

Stun-gun maker Taser International has been trying to work its way higher, and yesterday traders took a bullish shot on the name.

optionMONSTER's Heat Seeker program detected the purchase of 7,000 September 12.50 calls, most of which priced for $0.20. Volume was about 7 times open interest at the strike, indicating that new money was put to work.

Long calls lock in the price where investors can buy shares in the company. These options can generate significant leverage in a rally because they are much less expensive than buying stock outright, but the contracts will expire worthless if the shares don't move far enough and fast enough. (See our Education section)

TASR fell 0.52 percent to $7.70 yesterday but is up 88 percent in the last year. It's recently been trying to make a higher low and remains above its rising 200-day moving average, which some chart watchers may consider a bullish pattern.

Total option volume was 22 times greater than average in the session, with calls outnumbering calls by more than 300 to 1.

(A version of this post appeared on InsideOptions Pro yesterday.)

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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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