Mortgage-service provider PHH has been ailing, and one investor
wants to put a long position out of its misery.
optionMONSTER's tracking systems detected the sale of 11,000 April
12.50 calls for $1.65. An equal number of May 15 calls were bought
at the same time for $0.80, but volume was below open interest.
That suggests that the investor owns PHH shares and had previously
sold the May contracts as part of a covered call strategy. The
trader is now rolling it forward by one month and lowering the
strike from $15 to $12.50. That reduces the time in the trade and
cuts the exit price by $2.50, yielding a credit of $0.85 in the
PHH is off 1.31 percent to $13.60 in morning trading and down 39
percent in the last year. It's been steadily trending lower,
following its 100-day moving average. Shares now seem to be hitting
resistance at that level again, which could be leading today's
trader to believe that they will continue to decline.
Overall option volume is more than 240 times greater than average
in the name so far in the session.
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