Options Trading News

December 19, 2012  Wed 9:50 AM CT

BP is seeing large call volume with shares right in the middle of their six-month range.

optionMONSTER's systems show that 5,000 January 46 calls were sold for the bid price of $0.10 against open interest of almost 17,000 contracts. At the same time the tradre bought 5,000 July 46 calls for the ask price of $1.14 in volume that was above the open interest of 2,003 at that strike, so that is a new opening position.

This could be a new calendar spread, with the trader risking $1.04 for a maximum profit that would come with BP right around the $46 strike price at that first expiration. But given that the sale of the nearer-term options nets such a small amount, it seems far more likely that this is a roll, with the trader exiting long calls in January and moving the position to July for more time. (See our Education section)

BP is up 0.5 percent to $42.23 this morning, on pace for its highest close in six weeks. The energy giant's shares carved out a range from March to the end of May as the stock fell from a 52-week high above $48 to a low of $36.25.
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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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