OptionsHouse

Options Trading News

September 19, 2016  Mon 5:16 AM CT

JCI: SEE CHART GET CHAIN FIND STRATEGIES

A large trader apparently believes that upside potential is limited in Johnson Controls.

optionMONSTER's market scanners show that 6,000 October 46 calls were sold in one print for $0.57 on Friday. This is clearly a new position, as open interest in the strike was a mere 24 contracts before the trade occurred.

Short calls generate income and lock in the price where a stock must be sold. The trade is usually done in conjunction with long shares in a covered-call strategy, reflecting a belief that gains will be limited through expiration. (See our Education section)

JCI rose 0.61 percent to $44.55 on Friday. The manufacturer of auto parts and air conditioners is expected to release quarterly results before the market opens on Nov. 11.

Overall option volume was 4 times greater than average in the name on Friday.

Share this article with your friends


OptionsHouse

Premium Services

Education & Strategy

Using spreads to minimize risk

Last week we discussed the risk vs reward profile of a debit call spread in Wells Fargo (WFC). This week we will run thru the risk vs reward of selling a credit put spread to achieve the same exposure of that debit call spread.

View more education articles »