Why trader is sellling calls in Zynga
Chris McKhann | [email protected]
optionMONSTER systems show that one block of 8,151 January 4.50 calls was sold for the bid price of $0.44. The volume was more than twice the strike's open interest at the start of the session, clearly showing that this is a new position.
The calls could have been sold naked as a bet that the stock will stay below the $4.50 strike price in the coming year. But it is more like that they were traded against long shares in a covered call strategy, which would be bullish up to that level but would not see any gains above it. (See our Education section)
ZNGA is up 1.6 percent at $3.22 this morning, but those gains barely put a dent in the losses of the previous two days. The social-gaming company was at $3.75 on Monday, its highest price since gapping down with earnings results in July.