Options Trading News

July 5, 2012  Thu 3:28 AM CT

Yandex is attempting to bounce at a key level, and the bulls are stepping in.

optionMONSTER's Heat Seeker monitoring program detected the purchase of about 4,100 November 21 calls for $2 and the sale of an equal number of November 26 calls for $0.50. Volume was more than 6 times open interest at both strikes.

The trade resulted in a cost of $1.50 and will earn a maximum profit of 233 percent if the Russian Internet stock closes at or above $26 on expiration. The strategy known as a call spread because it leverages a move between two prices. (See our Education section)

YNDX rose 1.58 percent to $19.27 on Tuesday but is down 28 percent in the last three months. It's been hammered along with most other emerging-market stocks as investors worry about financial contagion in Europe and slow growth in China.

Sentiment, however, has been improving more recently as investors return to economically sensitive assets such as oil and metals. YNDX peaked between $26 and $27 in April, and the bullish call spread is looking for a return to that level.

Overall option volume in the name was 9 times greater than average in the session, with not a single put changing hands.
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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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