One investor is trying to turn time into money with CentryLink.
optionMONSTER's tracking programs detected the sale of 5,000 April
41 calls for $0.57 and the purchase of an equal number of January
40 calls for an average premium of $0.375. Volume was below open
interest in the January options but not the April contracts,
indicating that an existing position was rolled from one contract
to the other.
The investor probably owns shares in the slow-moving telecom and is
using the options to earn extra income and
. (See our
section for more on
Adjusting the position allows the trader to collect an additional
$0.195 of income and raises by $1 the level at which the shares can
be sold. He or she also avoids the possibility of being forced to
unload the stock at expiration two weeks from now.
In addition to the credit received from selling calls, the investor
receives the company's rich 7.2 percent annualized dividend yield.
The net result is a slow-money trade with a risk profile akin to
owning bonds but with a much higher potential return.
CTL rose 0.38 percent to $39.91 on Friday. Its total option volume
was 5 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.
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