Options Trading News

February 11, 2013  Mon 12:20 PM CT

One investor wants to have their cake and eat it too in Nasdaq OMX.

The financial exchange has been quietly rallying all year and surged sharply in the late morning after a report that it may be acquired in a leveraged buyout at the hands of Carlyle Group. optionMONSTER's Heat Seeker trade scanner showed a flurry of call volume in the name as an investor adjusted a winning trade, letting him or her lock in gains while staying exposed to further upside.

Some 4,025 March 28 calls were sold for $3 in volume below open interest of 4,770 contracts, suggesting that an existing position was closed. The investor then bought matching number of March 31 calls for $1. He or she received a credit of $2 and now stands to keep making money with the 31s if the stock continues to climb. (See our Education section)

NDAQ is up 4.28 percent to $30.73 in afternoon trading and has gained 30 percent in the last three months. It's been climbing along with other financial stocks as sentiment brightens toward the economy and markets. The company has also been shifting its business toward activities with steadier revenues than equity trading.

Total option volume is 42 times greater than average so far today, according to the Heat Seeker. Calls outnumber puts by almost 9 to 1.
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The covered call and unhedged risk

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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