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November 2, 2012  Fri 2:14 AM CT

IDCC: SEE CHART GET CHAIN FIND STRATEGIES
InterDigital has been running higher since reporting earnings results last week, but a large option trader apparently believes that any further upside is limited in the wireless-technology company.

A trader sold 4,000 December 47.50 calls for the bid price of $0.50, according to optionMONSTER's tracking systems. Open interest in the strike was a mere 6 contracts at the start of the session, so this is clearly a new position.

IDCC rose 7.04 percent yesterday to finish at $40.77, its highest close since gapping down from $46 in January. The rally adds to gains of the previous two days, which took the stock up from $34.

Yesterday's call selling sees more potential upside for the stock, but not beyond the $47.50 strike price. These options could have been sold naked with an initial bearish bias, or they could have been traded against an existing long position in a covered call strategy. The latter would be bullish up to the strike but gives up any upside in the stock beyond that. (See our Education section)
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Options Academy: Ron's Risk Calculation--A Real Life Example

It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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