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)
Share this article with your friends

Invest Like a Monster - San Antonio: October 9-10

Premium Services

Archived Webinar

Education & Strategy

Options Academy: More on the Covered Call Strategy

Last week, we talked about the Covered Call and the misconceptions that surround it. We spoke about how an investor must realize that the Covered Call is actually a premium collection strategy and not so much a directional one. If an investor can grasp this idea, the investor stands to do a heck of a lot better in the strategy than they currently do.

View more education articles »