Netease.com draws hedged strategy

By optionMONSTER,  January 27, 2012, 02:48:14 AM EDT

Netease.com has been trying to lift itself, and one investor is adjusting a hedged position.

optionMONSTER's tracking systems detected the purchase of 1,561 March 55 calls for $0.85 and the sale of an equal number of June 60 calls for $1.10. Volume was below open interest in March but not June, indicating that an existing short position was rolled from one contract to the other.

The investor probably owns shares in the Chinese gaming company and is using the options as part of a covered call strategy. Adjusting the trade generated a credit of $0.25 and increased by $5 the level where they will exit the stock. It also kept them in the position for an additional three months. (See our Education section)

NTES, which fell 1.51 percent to $48.24 yesterday, has been moving sideways for the last year. It held up much better than most other Chinese stocks last year amid a wave of accounting scandals and delistings in the space.

Overall option volume was 4 times greater than average in the session.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Options

Referenced Stocks: NTES



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