Options Trading News

March 27, 2013  Wed 1:49 AM CT

Some investors think Sysco might be ready to pause after climbing to its highest level in more than five years.

optionMONSTER's Depth Charge monitoring program detected the purchase of about 2,200 May 35 puts, most of which priced for $0.65 to $0.90. Volume was almost 18 times open interest at the strike, indicating that new positions were initiated.

Those puts lock in the price where investors can sell shares in the food distributor. They can appreciate in value quickly if it falls, but will lose all or most of their value if it doesn't. Investors often buy the contracts to protect long positions against pullbacks, letting them hedge declines without selling shares. See our Education Section for more on risk management.

SYY fell 0.06 percent to $35 yesterday, but is up 17 percent in the last year. Earlier in the session, it touched $35.62, a level it hadn't seen since September 2007.

Total option volume was almost quadruple the daily average in Tuesday's session, according to Depth Charge. Puts accounted for more than 60 percent of the total.
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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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