Why trader is selling calls in energy fund
Chris McKhann | email@example.com
The XLE is up fractionally at $64.52 in afternoon trading. Yesterday the exchange-traded fund hit a high of $65.88 but gave up that ground by the close. Shares bounced off support at $62 at the start of the week, their lowest level since early October, but remain in a downtrend from above $76 in late February.
A trader sold 4,000 June 66 calls for the bid price of $0.64, according to optionMONSTER's systems. The volume was 4 times the open interest, so it is a new position.
The calls may have been sold naked as a bet that can profit with the XLE anywhere below $66.64 at expiration. If the options were traded against long shares in a covered call strategy, the position would take a maximum profit with shares at or above $66 at expiration but give up any gains above that stock price. (See our Education section)