Options Trading News

January 16, 2013  Wed 2:45 AM CT

One investor is keeping hope alive in Big Lots as the retailer holds long-term support.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 10,000 April 32.50 calls for $0.85 and the sale of 8,201 January 30 calls for $0.05. Volume was below open interest in January, indicating that an existing long position was closed and rolled forward in time.

The trade cost about $809,000 and gives the investor an additional three months of upside exposure to the stock. Given that the January 30s expire this Friday, they might have had no bid by today, so adjusting the position yesterday probably saved money. (See our Education section for more on how time affects option prices.)

BIG, which rose 3.58 percent to $29.78 yesterday, has been trading in its current range since a weak earnings report sent the shares plummeting on Aug. 23. The following release last month was better than expected.

The shares have bounced around their current $27-$29 range several times in the last three years, which could be leading some chart watchers to think that the stock will climb from here. The call roll simply provides more time for that move to occur.

Total option volume was 35 times greater than average in the session, according to the Heat Seeker. Calls outnumbered puts by more than 90 to 1.
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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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