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Hedged strategy in place on Cameron

Cameron has been in a steady uptrend, and one investor is using options to manage a long position.

optionMONSTER's tracking systems detected heavy call activity in the provider of oil-field services, which is now attempting to build support at the same level where it peaked in the first half of 2010 before pulling back and ripping to all-time highs early this year.

A block of 2,850 August 50 calls was bought for $0.90, but volume was below open interest--an indication that an existing short position was closed. The same number of January 55 calls were purchased at the same time for $2.10, resulting in a net credit of $1.20.

The trade was probably the work of an investor who owns CAM stock and is using the options as part of a covered call strategy. Today's activity would have then resulted from him or her rolling the calls to a higher strike and further into the future.

In addition to the income generated from the greater time value in the January contracts, the trader can earn another $5 if the stock rallies back to $55. (See our Education section)

CAM is up 4.57 percent to $44.65 in morning trading. Earnings and revenue exceeded forecasts the last time Cameron issued results on July 28. New orders rose 72 percent, partly fueled by more demand for blowout protectors after last year's massive Gulf of Mexico oil spill.

Calls outnumber puts by a bullish 50-1 ratio in the name so far today.

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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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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