Options Trading News

Cabot Oil & Gas has been trapped at resistance for almost a month, and one investor apparently thinks that it not see further gains.

optionMONSTER's tracking systems detected the sale of almost 3,200 September 40 calls against open interest of just 15 contracts. Most of them priced for $3 to $3.05.

The trader is now obligated to sell shares in the shale-energy company if they close at or above $40 on expiration, but including the credit earned their exit price would be about $43. He or she probably owns stock and is using the strategy to reduce risk. (See our Education section's discussion of covered calls.)

COG rallied from about $31 to $40 during June but has been moving sideways since then. Yesterday's call selling reflects a belief that the stock will stay in that range in the next two months. The shares closed yesterday down 1.35 percent to $39.50.

Overall option volume was 4 times greater than average in the session.