Options Trading News

April 8, 2013  Mon 9:34 AM CT

Citrix Systems fell hard last week, but the option paper is bullish today.

Our Heat Seeker monitoring system detected the purchase of 3,000 June 67.50 calls for $4.60 and the sale of an equal number of June 72.50 calls for $2.40. Volume was below open interest at the 72.50s, so there are two possible explanations for the trade.

One is that a new bullish call spread was opened at a cost of $2.20 with potential profit of 1.27 percent on a move to $67.50. Alternatively, the trader may have rolled an existing long position lower. The latter would have also cost $2.20 but would increase leverage in the event of a rally. (See our Education Section for more on how options can be used to manage trades.)

CTXS is down 2.53 percent to $67.16 in morning trading. It gapped higher following a strong earnings report on Jan. 30 but has been drifting lower along with other technology companies since mid-March. The selling has intensified in the last week, with a drop of almost 7 percent.

The next earnings-release date hasn't been announced yet, but last year's schedule suggests that it will be around April 25. Today's trader stands to benefit from a good report.

Total option volume is quadruple the daily average so far today, according to Heat Seeker. Calls outnumber puts by a bullish 10-to-1 ratio.
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I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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