Why ProLogis is seeing surge in calls

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Slowly but surely, ProLogis is expected to keep nudging higher.

optionMONSTER's tracking programs detected unusual call volume yesterday in the real-estate investment trust, which owns industrial buildings and warehouses.

A block of 3,500 September 35 calls was purchased for $1.15 at less than previous open interest, while an equal number of October 36 calls were sold at the same time for $1.35. Volume was below open interest in the October contracts, indicating that an existing short position was rolled from one strike to the other.

The investor probably owns PLD shares and is using the options to earn income while holding the position. He or she collected an incremental $0.20 of premium and now stands to make an additional $1 of upside from the stock rising, plus 3 percent from the dividend.

PLD rose 1.26 percent to $36,18 yesterday and is up 16 percent in the last three months. It's the type of stock that often is owned against short calls as part of income strategies because of its steady quarterly payouts and low volatility. Those attributes allow the creation of positions more akin to owning bonds than stocks. (See our Education section for more on how to turn time into money while managing risk.)

Total option volume in PLD was 15 times greater than average yesterday.




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: PLD

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