Options Trading News

March 8, 2013  Fri 4:14 AM CT

Nuance Communications is trying to hold above some long-term lows, and yesterday the bulls wagered on a bounce.

optionMONSTER's Heat Seeker system detected unusual activity in the July 19 calls, with buyers paying $1.65 to $1.70. Those premiums quickly inflated to $1.95 as shares began ticking higher, which shows the kind of leverage that can be achieved with options.

Such long calls lock in the purchase price for the stock, so even a small move in the share price can have a big impact on the value of the options. (See our Education section)

NUAN was down slightly when the trades first hit but ended the session up 0.74 percent to $19.02. The maker of voice-recognition software has lost more than 20 percent in the last month, with most of that drop following a weak earnings report on Feb. 7.

More than 8,300 of those July 19s traded in the session, almost 10 times the strike's open interest before the session began, clearly indicating new activity. Calls outnumbered puts by a bullish 14-to-1 ratio.

(A version of this post appeared on InsideOptions Pro yesterday.)
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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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