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September 3, 2013  Tue 3:03 AM CT

SPLS: SEE CHART GET CHAIN FIND STRATEGIES

One investor is turning time into money with Staples.

optionMONSTER's tracking programs detected the sale of 2,532 March 15 calls for $0.72 and the purchase of an equal number of September 15 calls for $0.10. Volume was below open interest at the nearer-dated strike, indicating that an existing short position was closed and rolled forward in time.

He or she probably owns shares in the office-supply retailer and sold the September contracts as part of a covered-call trade. Adjusting the strategy let them collect and an additional $0.62 of income, while keeping them in the name for an additional six months. See our Education Section for more on how to earn money from the passage of time with options.

SPLS fell 1 percent to $13.91 on Friday, and has spent most of the last year trying to rebound from a decline that started in the middle of the last decade. It bottomed around $10.50 in August 2012 and rebounded over $17.30 by mid-August, only to plunge on a weak earnings report later in the month.

Some chart watchers may now expect the shares to settle into a range after that big rebound and correction, so it makes sense to implement income trades. In addition to the premium received from writing calls, Friday's investor also stands to collect the stock's 3.4 percent annual dividend yield.

Total option volume was slightly above average in the session, with calls accounting for almost all the activity.

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Education & Strategy

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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