Options Trading News

December 24, 2012  Mon 10:10 AM CT

Aqua America hardly usually sees very little option activity, but today call buyers are looking for the water utility to track back near the high end of a five-month range.

optionMONSTER's Heat Seeker systems shows that 1,430 March 25 calls have traded in a strong buying pattern, with premiums rising from $0.65 to $0.90. The volume isn't huge but is well above the strike's previous open interest of 389 contracts and dwarfs the name's total daily average of 52 options.

WTR is up 0.62 percent to $25 even, sitting right at its 100-day moving average and just below its 50-day line. The stock failed to break through resistance at its 52-week highs near $27 in July and has been trapped between $24 and $26 since then.

The March 25 calls, which lock in the price where traders can buy the stock, are looking for shares to trade back near the top of that channel by expiration in mid-March. (See our Education section)

The strike's activity has made up nearly all of WTR's total option volume of 1,495, which is 29 times higher than usual. A grand total of 3 puts have changed hands in the name all day.
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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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