Trade looks for Boston Properties to hold


Boston Properties has been slowly grinding higher, and traders are using options to turn time into money.

BXP Our tracking systems detected the purchase of 2,000 September 75 calls for $7.14 against existing open interest and the sale of an equal number of January 80 calls for $7.44. The trade earned a credit of $0.30 and pushed total options volume in the office-building owner to more than 7 times greater than average.

BXP fell 0.81 percent to $81.06 yesterday but is up about 6 percent in the last three months, bucking a 4 percent decline in the S&P 500 over the same period. The real-estate investment trust reported better-than-expected earnings on July 27 and guided the next quarter in line with analysts' forecasts.

REITs have done better than many stocks because their attractive dividend yields attract yield-starved investors looking to outperform extremely low interest rates in the Treasury-bond market.

Monday's call trade was similar to a fixed-income investment because it generates a set profit from the simple passage of time. In this case, it was probably implemented by a shareholder who had already sold the September options as part of a covered-call strategy.

Rolling the short position higher not only generates a small credit. It also gives them the right to collect an additional $5 because the strike price at which they must sell the stock was increased. In return for the profit, he or she agreed to hold BXP for an additional four months.

Similar trades were detected in the stock in March and May, indicating at least one large investor expects BXP to hold its ground or push slightly higher, and is determined to continue selling calls against it to earn premium.

(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: BXP



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