What the calls mean in Super Micro
David Russell | [email protected]
optionMONSTER's tracking systems detected the sale of 1,470 September 12.50 calls for 40.40 and $0.35. There was no previous open interest at the strike, indicating that new positions were taken.
The trader almost certainly owns shares in the computer maker and wants to reduce some risk before the quarterly numbers are released after the closing bell next Tuesday, Aug. 6. Writing the calls obligates the investor to sell stock at the strike price but also generates income now to lower the cost basis. Known as a covered call, the strategy is frequently used to reduce volatility. (See our Education section for more ideas on how to manage risk with options.)
SMCI rose 1.64 percent to $11.78 yesterday and has been grinding in a range since 2010. It has peaked between $12.50 and $13.50 several times in the last year, which could make some chart watchers expect resistance around that area.
Total option volume was more than 100 times average amounts in the name.