One investor is using options to spice up a slow-money trade in
optionMONSTER's tracking programs detected the sale of 2,230
September 18 calls for $0.70 and the purchase of an equal number of
March 18 calls for $0.55. Volume was below open interest in the
March contracts, indicating that an existing short position was
rolled forward in time.
The investor probably owns shares in specialty finance company and
is using the options as part of a
strategy. Adjusting the trade let him or her collect an incremental
$0.15 credit in return for holding the stock for an additional six
months. (See our
section for more on how options can be used to manage trades.)
ARCC has been paying dividends of about $1.70 annually. Selling the
calls allowed the trader to boost that amount by about $0.30,
raising the yield to almost 11 percent from 9.2 percent. It also
provides some protection against a potential decline in the share
The stock fell 0.24 percent to $18.47 on Friday. Ares' portfolio
companies operate in an array of industries including health care,
restaurants, and telecom carriers.
Total option volume in the name was 11 times greater than average
in the session.
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