Trader bets on cap to upside in Cabot
David Russell | email@example.com
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.