Options Trading News

June 28, 2013  Fri 4:45 AM CT

GT Advanced Technologies is trying to make a comeback, and traders are hoping to ride the wave.

More than 4,600 December 5 calls traded in a strong buying pattern yesterday, most of them going for $0.50. The volume was well above the strike's open interest of 2,725 contracts, indicating new activity.

These long calls, which lock in the price where traders can buy the stock, are looking for GTAT to rally above $5.50 by mid-December. But they will expire worthless if the shares remain below the $5 strike price. (See our Education section)

GTAT gapped higher by 13.85 percent to $4.11 yesterday after Canaccord Genuity upgraded the stock to a "buy" from a "hold" while raising its price target to $5 from $4. That brought the stock back above its 50-day moving average, but the shares are still 42 percent below their 52-week high of $7.09 from last September and 76.5 percent under their all-time high of $17.50 reached in July 2011.

The company, which makes photovoltaic equipment, fell hard with the collapse of the solar-technology market but is expected to benefit from the budding recovery in that industry. Perhaps more important, GTAT has been diversifying into sapphire touchscreens and other technologies with high growth potential.

Yesterday's call buying pushed total option volume in the name to 9,498 contracts, more than 33 times its daily average for the last month.
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The covered call and unhedged risk

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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