Options Trading News

October 23, 2012  Tue 10:31 AM CT

Windstream is falling along with the rest of the market today, and investors are worried about further downside.

optionMONSTER's Depth Charge monitoring program detected the purchase of more than 10,000 December 9 puts for $0.22 to $0.25. Volume was more than 300 times previous open interest at the strike, indicating that new positions were implemented.

Those puts confer the right to sell shares in the telecom company for $9 no matter how low they fall, so the investor stands to be compensated in the event of a big drop. (See our Education section for more on how options can be used to leverage moves in share prices.)

WIN is down 1.84 percent to $9.60 today and has lost 12 percent of its value in the last month. Most of that drop occurred in late September after the stock paid a dividend and slammed into resistance at its 200-day moving average.

The next scheduled event that could serve as a potential catalyst is the release of third-quarter earnings on Nov. 8.

Overall option volume in the name is 8 times greater than average, with puts outnumbering calls by 15 to 1.
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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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