Unusual trade in Jones Lang LaSalle

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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.

JLL Chart The short-call roll allowed the investor to collect an extra $1.30 of premium and was probably executed against ownership in the stock.

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 income.

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)



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 , JLL

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