Options Trading News

May 15, 2013  Wed 9:22 AM CT

A bullish spread dominates today's option activity in consumer product retailer Conn's.

More than 9,000 CONN options have traded, compared to a daily average of just 219 contracts in the last month. Virtually all of the volume is in an October three-way spread.  

optionMONSTER systems show that a trader bought 3,000 October 50 calls for $5 and, at the same time, sold 3,000 each of the October 60 calls for $1.70 and the October 40 puts for $2.20.

This combination uses the sale of the higher-strike calls and the puts to offset the cost of the October 50 long calls. The trader spends just $1.10 to get that exposure up to $60 while giving up gains above that level and faces the possibility of buying shares below $40 if assigned. (See our Education section)

CONN is up 0.7 percent to $48.33 this morning, matching Monday's all-time record closing high. Shares were last below $40 on April 19.
Share this article with your friends

Invest Like a Monster - San Antonio: October 9-10


The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

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.

View more education articles »