Options Trading News

January 18, 2013  Fri 4:45 AM CT

Williams has been very active recently, and some investors are in the name for the long haul.

optionMONSTER's Heat Seeker monitoring system detected the purchase of about 80,000 January 2014 40 calls for about $0.86. A similar number of January 2014 45 calls were sold for $0.16, and volume was more than twice the previous open interest at each strike.

The trade cost $0.70 to open and will earn a maximum profit of 614 percent if WMB closes at or above $45 on expiration one year from now. It's known as a bullish call spread because it leverages a move between two prices, in this case $40 and $45. (See our Education section)

WMB rose 1.08 percent to $33.80 yesterday. The natural-gas stock has steadily trended higher since early 2009 and delivered many winning trades on the long side. Option activity has picked up again this month and already saw large bullish trades on at least two other occasions.

Total option volume was 10 times greater than average in the session, according to the Heat Seeker. Calls outnumbered puts by 52 to 1.
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The covered call and unhedged risk

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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