Foot Locker is back to long-term resistance, and one investor is
looking for a pause.
optionMONSTER's monitoring systems detected the sale of about 4,500
August 35 calls for $0.45 to $0.60 against open interest of 2,732
contracts. The trade accounted for three-quarters of the option
volume in the name on Friday.
FL rose 2.13 percent to $33.64 on Friday. The shoe retailer has
rallied more than 40 percent so far this year and is now back near
the level where it peaked in late 1992. That could make some
traders expect a pause in the near term.
Writing calls is a common strategy in such a situation because it
lets the investor agree to sell shares--but only if they surpass a
certain price. Below that level, he or she keeps the premium and
the contracts expire worthless.
Investors who own stock often sell calls to earn extra income,
knowing they may be required to unload their shares if the rally
continues. In the case of Friday's trade, their exit price would be
$35.45 to $35.60. That's still more than 5 percent above the close.
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Overall option volume was 16 times greater than average in the