Options Trading News

December 14, 2012  Fri 2:14 AM CT

Cheniere Energy Partners drew a large put trade yesterday as its shares remained trapped in tight range.

optionMONSTER's systems detected the purchase of 3,220 March 20 puts for $1.45 below open interest of 3,599 contracts. At the same time, the trader sold 3,220 June 20 puts for the bid price of $2.10 in volume above open interest and therefore a new position.

This could be a roll of short puts, with the trader buying back the March contracts and selling June puts to collect more premium. Or this could be a short calendar spread, which would be designed to profit if shares move sharply in either direction. (See our Education section)

CQP slipped 0.1 percent to close at $20.48 yesterday and has been range-bound between about $20 and $21 for nearly a month. The company, which operates liquefied natural-gas pipelines, had traded to its 2012 low just under $18 a month ago. Shares had been above $26 as recently as mid-September.

Yesterday's total option volume in CQP topped 7,000 contracts, compared to its daily average of just 365 in the last month.
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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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