tradeMONSTER: Trade free for 90 days

Options Trading News

July 19, 2013  Fri 9:13 AM CT

BHI: SEE CHART GET CHAIN FIND STRATEGIES
Baker Hughes is down after missing earning estimates this morning, and one trader does not hold out much hope for a bounce in the oilfield-services company.
 
More than 10,000 BHI options have change hands already, compared to a total daily average of 6,800 in the last month. Almost all of the volume is in one transaction.

optionMONSTER systems show that a trader bought 3,500 July 46 calls for $1.24 against previous open interest of 13,000 contracts. At the same time, he or she sold 3,500 October 47 calls for $2.34 in volume far above open interest of just 715 at that strike, indicating new positioning.

Given that the July options expire at the end of today's session, this is clearly a roll of a short-call position. The adjustment avoids automatic assignment at expiration, but the trader is still selling in-the-money calls, so he or she doesn't see any upside in the stock but is looking to collect option premium. The calls were very likely sold against long shares in a covered-call strategy. (See our Education section)

BHI is down 3.83 percent to $47.20. The stock hit support at $44 just a month ago but has been testing resistance and 52-week highs around $50 for the last two weeks.
 
Share this article with your friends


Invest Like a Monster - Las Vegas: March 13-14

Premium Services

Archived Webinar

The Art of Trading: Forgiving the Spread

Education & Strategy

Know thy Greeks!

One of the most important roles played by the Option Pricing Model is the calculation of an important family of...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER