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November 8, 2012  Thu 3:16 AM CT

GNTX: SEE CHART GET CHAIN FIND STRATEGIES
One investor is targeting a key level on Gentex's chart, looking for the auto-parts company to remain weak for at least the next month.

optionMONSTER's tracking programs detected the sale of about 4,000 December 20 calls for $0.25 and $0.30. Volume was almost triple previous open interest at the strike.

The investor is now obligated to sell shares in the company for $20 if they close above that level on expiration. He or she may already own the stock or simply be using the calls to earn income on the name. (See our Education section)

GNTX fell 3.06 percent to $17.43 yesterday and has lost more than 40 percent of its value this year. It bounced around $20 in June, then gapped lower the following month on a weak quarterly report. That could make some chart watchers expect resistance around $20 and help explain the call selling at that level.

The trade pushed total option volume to about 8 times greater than average in the session.
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Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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