Why trader is selling calls in Neonode

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The sellers aren't done with Neonode.

optionMONSTER's tracking programs detected a surge of activity in the January 7.50 calls for $0.50 against open interest of just 779 contracts. Both blocks printed for $0.50, much closer to the bid price than the ask, which indicates that they were sold.

NEON, which makes infrared touchscreens for consumer electronics, is down 5.35 percent to $4.78 in afternoon trading. It reached an all-time high $7.40 in early July but has been dropping since.

Selling calls is a common strategy when a trader believes that a stock has limited upside. If it remains below the strike price, the contracts will expire worthless and the premium earned will be kept as profit. Above $7.50, he or she must unload their stock. (See our Education section for more ways that options can be used to make money from the passage of time .)


NEON usually sees about 1,200 contracts in a typical session, but today's volume is almost quadruple that amount.



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: NEON

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