Options Trading News

September 14, 2012  Fri 9:11 AM CT

Electronic Arts has rallied to its highest levels since May, but one trader is positioning for a ceiling above the shares.

EA is up 1.6 percent to $14.47. The digital game company had declined steadily after trading above $25 last November but has been rebounding since hitting a 52-week low of $10.77 at the end of August, its lowest price since 1999.

optionMONSTER's systems show that almost 7,000 December 17 calls have traded against open interest of 938 contracts, clearly indicating new activity. They were sold from $0.48 down, with a block of 6,268 going for the bid price of $0.46.

The calls may have been sold naked, which would have a bearish bias but profit at expiration with EA anywhere below $17. If the options were traded against stock as a covered call, the position would take a maximum profit at or above $17 but would give up any gains beyond that price. (See our Education section)
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The art of trading

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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