Options Trading News

June 19, 2013  Wed 3:47 AM CT

One investor wants to get paid waiting for a rally in Canadian Natural Resources.

optionMONSTER's tracking programs detected the sale of 1,873 July 32 calls for $0.22 and the purchase of an equal number of June 32 calls for $0.05. Volume was below open interest in the June contracts, indicating that an existing short position was closed and rolled forward in time.

The investor probably owns shares in the Calgary energy company and has been selling calls to earn income. Adjusting the position allowed the trader to collect an additional $0.17 of premium but obligates him or her  to sell the stock for $32 if it closes above that level on expiration. (See our Education section for more on the strategy, known as a covered call.)

CNQ rose 0.61 percent to $29.65 yesterday and has been churning in a range for more than a year. The stock's technicals have been mostly bearish, with the shares mostly below their 200-day moving average since July 2011.

But they've been holding their ground since March, which could make some traders think that they're ready for a turnaround. In the meantime, the investor can collect the 1.6 percent dividend yield and earn income selling calls.

Total option volume was quadruple the daily average in the session.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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