Options Trading News

March 19, 2013  Tue 2:45 AM CT

JDS Uniphase has pulled back since hitting a long-term resistance level a week ago, and one trader is positioning for more downside.

optionMONSTER's Depth Charge system shows that a trader sold 6,000 April 15 puts for $0.58 yesterday while buying the same number of May 15 puts, mostly for $1.03. Volume was below open interest in the April options but above it in the May contracts.

This suggests that a trader is closing the nearer-dated position and rolling it out by a month for a net cost of $0.45. These puts, which lock in the price where the stock can be sold no matter how far it might decline, are looking for JDSU to fall by expiration in mid-April. (See our Education section)

JDSU retreated 1.64 percent yesterday to close at $14.97. The telecom-equipment maker has been drifting lower since hitting resistance at $15.55 on March 11, just pennies away from its highest intraday price since July 2011.

Yesterday's put trading pushed JDSU's total option volume to 19,500, nearly 11 times its daily average of 1,813 in the last month.
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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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