Options Trading News

November 26, 2013  Tue 5:16 AM CT

NCR fell sharply after reporting earnings last month, but traders apparently believe they they'll get a chance to ring up some profits in coming months.

optionMONSTER's Heat Seeker system showed that 2,800 January 33 calls were bought, mostly for $2.25 to $2.35. Volume was more than 19 times the previous open interest in the strike, which indicates that new money was put to work.

These long calls lock in the price where investors can buy shares in the maker of ATMs and cash registers, letting them cheaply position for a rebound. Yesterday's contracts are especially noteworthy because they are in the money, which means that they will track the share price closely and give them significant leverage to a rally. (See our Education section)

NCR fell 1.69 percent to $34.38 yesterday. The stock traded for more than $40 before gapping lower on a weak revenue number in late October.

Total option volume in the name was twice the daily average for the last month, with overall calls outnumbering puts by more than 10 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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