Windstream trade targets resistance

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Windstream faces potential resistance around $14, and one investor is using options to exploit that level.

WIN optionMONSTER's tracking systems detected a surge of buying in the telecom stock for about $13.30 as about 300,000 shares changed hands in a five-minute period. Shortly after, about 3,200 May 14 calls were sold for $0.25.

The trade appears to be a covered call, where an investor buys a stock and sells upside calls to reduce the cost. The result is that the trader is now long WIN for about $13.05 and will be obliged to sell shares for $14 if it advances to that level. (See our Education section)

The shares continued higher and are now up 1.21 percent to $13.40 in morning trading. WIN peaked around $14 in mid-2008, which could cause some chart watchers to expect resistance around that price. Today's option trade, for instance, is apparently designed to make the most money from such a move.

Overall option volume in WIN is 5 times greater than average, with not a single put changing hands.

(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 Nasdaq, Inc.

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This article appears in: Investing , Options


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