Options Trading News

November 28, 2012  Wed 9:31 AM CT

Calls are surging in Yahoo as shares come off a four-year high reached yesterday.

YHOO is down 1.35 percent to $18.67 this morning. The Internet stock traded as high as $19.16 in yesterday's session and saw its highest close since September 2008. Shares were below $15 going into September.

A trader sold 5,000 January 19 calls for the bid price of $0.62 in volume that was less than the strike's open interest of 81,000, according to optionMONSTER's systems. At the same time, he or she bought 5,000 July 19 calls for the ask price of $1.61 compared with open interest of just 269 contracts, so it is a new position.

The trade could be a roll of long calls from January out to July, which would limit the position's time decay. Or it could be a new calendar spread designed to profit from greater time decay of the nearer-term options and take a maximum profit if YHOO is right around $19 at the January expiration.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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