Trade lowers bar in Range Resources
David Russell | [email protected]
optionMONSTER's tracking systems detected the sale of 2,234 January 67.50 calls for $0.76. An equal number of December 72.50 calls were bought at the same time for $0.05 against open interest, which suggests that an existing short position was closed and rolled to the other strike.
While such adjustments are common, the unusual aspect of yesterday's transaction is that it lowered the strike price by $5, which reduces the price at which the trader must sell shares in the natural-gas company. The trader, who collected a credit of $0.71 in the process, almost certainly owns the stock and had sold the contracts as part of a covered call strategy. (See our Education section)
RRC rose 2.25 percent to $62.52 yesterday and has been fluctuating in a range since mid-2011. It rolled over around $67.50 last month, which could have led yesterday's trader to believe that this level will become resistance.
Total option volume was more than triple the daily average in RRC during the session.