Trade keeps shooting higher for iStar
David Russell | firstname.lastname@example.org
optionMONSTER's Heat Seeker monitoring system detected the purchase of 4,100 January 2014 10 calls for $1.20. An equal number of January 7.50 calls, which expired Friday, were sold at the same time for $1.28, but volume was below open interest in those.
It appears the trader has previously owned the 7.50s and rolled the position to the higher strike, plus one year further out in time. He or she collected a credit of $0.08 in the process and avoided being forced to buy shares in the commercial-mortgage lender at Friday's close, when the January options expired.
Instead, the investor will now enjoy an additional year with ability to use the potential leverage afforded by the options. (See our Education section)
SFI fell 0.79 percent to $8.81 on Friday. The stock has rallied 20 percent in the last two months, fueled by heavy short covering. Like many other financials, it continues to trade at a deep discount to book value. The shares peaked over $50 before the real-estate bubble began to collapse in early 2007.
Total option volume was 7 times greater than average in the session, according to Heat Seeker. Calls outnumbered puts by a bullish 224-to-1 ratio.