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