Option activity surged in Jones Lang LaSalle yesterday as one
investor used an unusual strategy to earn cash from the real-estate
company's rich volatility.
Our tracking systems detected the purchase of 854 May 75 calls for
$3.60 against existing open interest at the same time that 854 June
75 calls were sold for $4.90. The transaction pushed options volume
in the name to about five times the average level.
The short-call roll allowed the investor to collect an extra $1.30
of premium and was probably executed against ownership in the
It came after implied volatility in JLL spiked to 45 percent, the
highest level since December. Given that the longer-dated calls are
more sensitive to changes in implied volatility than the May
contracts, the trader apparently wished to implement the trade
before market conditions calm and reduce the ability to earn
JLL rose 8.51 percent to $78.97 yesterday after spending the last
month consolidating around the $75 level. The property-management
firm reached a two-year high of $84.49 after reporting improved
business conditions on April 27, but it then retreated lower. It's
also facing potential resistance around $80 resulting from a
bearish gap on April 30, 2008.
The chart pattern suggests that the shares may consolidate further
at their current level, so the investor may have decided to earn
income as JLL moves sideways. The trade is an example of the many
ways that options can be used to make money even when a stock is
dead in the water. (See our Education section)
The transaction is also similar to an unusual transaction last
week in Boston Properties, another real-estate company--possibly
the work of the same investor.
(Chart courtesy of tradeMONSTER)
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