Credit: Shutterstock photoMortgage-service provider PHH has been ailing, and one investor wants to put a long position out of its misery.
optionMONSTER's tracking systems detected the sale of 11,000 April 12.50 calls for $1.65. An equal number of May 15 calls were bought at the same time for $0.80, but volume was below open interest.
That suggests that the investor owns PHH shares and had previously sold the May contracts as part of a covered call strategy. The trader is now rolling it forward by one month and lowering the strike from $15 to $12.50. That reduces the time in the trade and cuts the exit price by $2.50, yielding a credit of $0.85 in the process.
PHH is off 1.31 percent to $13.60 in morning trading and down 39 percent in the last year. It's been steadily trending lower, following its 100-day moving average. Shares now seem to be hitting resistance at that level again, which could be leading today's trader to believe that they will continue to decline.
Overall option volume is more than 240 times greater than average in the name so far in the session.
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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.
