One investor is turning time into money with Fidelity National
optionMONSTER's tracking systems detected the sale of 5,490 October
20 calls in the title-insurance company for $0.42. An equal number
of September 20 calls was purchased at the same time for $0.20, but
volume was below open interest in that strike.
This suggests that an existing short position was closed and rolled
forward in time. The investor probably owns shares and previously
sold the September calls to earn income. By adjusting the position
yesterday, he or she received an additional $0.22 of premium while
agreeing to stay in the trade for an additional month. (See the
section for more.)
FNF rose 1.23 percent to $19.79 yesterday. It fluctuated violently
after the 2008 mortgage-market collapse, then spent the next two
years consolidating in a range. In the last 12 months, however,
it's been working its way higher as earnings improve and sentiment
brightens in the housing the housing market.
Given this stronger backdrop, some observers may consider FNF a
fairly safe bet into the foreseeable future. Such companies are
often used in covered call trades, where upside contracts are sold
to earn income on a long stock position. Investors can also collect
a 2.9 percent annual dividend yield in the process.
Overall option volume in FNF was more than 50 times greater than
average in yesterday's session.
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