Trade gives James River room to run

By
A A A

James River Coal is in the midst of an rally, and one investor wants to give it free rein to run.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 3,000 March 17.50 calls for about $6.80 and the sale of a matching number of June 30 calls for $1.05. Volume was below open interest in the March contracts, suggesting a short position was rolled from one strike to the other.

JRCC The transaction was likely done by an investor who owns the shares and has been selling calls to earn income. The strategy let them reduce their entry price, but limits their profits if the stock rallies. Yesterday's transaction let them adjust the position to get more upside exposure.

He or she essentially paid about $5.75, and in return will have the right to earn an additional $12.50 on the shares moving higher. They also obtained three more months for JRCC to hit its mark.

The stock fell 1.61 percent to $23.24 yesterday. It began the session with a 33 percent gain in the preceding month as investors hunt for potential takeover targets in the coal-mining sector. Pete wrote about a similar transaction on Monday.

Overall options volume in JRCC was 14 times greater than average, with calls accounting for 91 percent of the activity.

(Chart courtesy of tradeMONSTER)



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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: JRCC

optionMONSTER

optionMONSTER

More from optionMONSTER:

Related Videos

Stocks

Referenced

Most Active by Volume

111,864,163
  • $3.91 ▲ 2.36%
76,404,746
  • $7.37 ▼ 5.03%
66,680,057
  • $15.25 ▼ 2.12%
61,293,760
  • $30.55 ▼ 6.09%
56,394,825
    $23 unch
55,005,642
  • $95.60 ▼ 2.60%
47,372,853
  • $95.02 ▼ 2.02%
44,783,481
  • $45.19 ▼ 2.40%
As of 7/31/2014, 04:07 PM