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How time is money for Murphy trader

One investor is turning time into money with Murphy Oil.

optionMONSTER's tracking systems detected the sale of about 1,800 April 57.50 calls for $5.15 and the purchase of an equal number of January 57.50 calls for $3.90. Volume was below open interest in the Januarys, indicating that an existing short position was rolled forward in time.

The investor probably owns shares in the Arkansas-based oil company and has been selling calls to earn income. He or she adjusted that position today, bringing in an additional $1.25 of premium. They're also eligible to receive the company's 2 percent annual dividend yield.

Selling calls reduces the volatility of the position and lowers the cost basis, but they're still at risk of a major decline. The trader also relinquishes earning big profits if the shares rally strongly. (See the discussion of covered calls in our Education section.)

MUR is up fractionally at $61.81 in morning trading. Total option volume is quadruple the daily average 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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


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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