What call selling means for bank index
Chris McKhann | email@example.com
The BKX is down 0.63 percent to trade at $43.88. The index has risen in the last three days, making for its best week in a month, but is still trading below the 10-day moving average. Shares were above $49 at the start of this month and above $50 at the beginning of April.
A single print of 9,000 July 47 calls dominates BKX's options, compared with a daily average of just 86 contracts in the last month, according to optionMONSTER's systems. The calls were sold for the bid price of $0.80 with no previous open interest at that strike, so this is a new position.
The BKX appears to be the domain of one trader, as the total current open interest is 9,000 in the May and June out-of-the money calls and 5,000, 6,000, and 7,000 in other June and July out-of-the-money calls.
This activity could not be part of a traditional covered call position because there is no single underlying for the BKX, though the options could have been sold against some of the underlying stocks or against the fund that follows the index. Or this could simply be a bet that the implied volatility of those calls is greater than actual volatility to come in the index. (See our Education section)