Markets

Trader bets on limited upside in CIT

CIT Group has been trending higher, but one investor apparently thinks that further upside will be limited into the summer.

optionMONSTER's tracking programs detected the sale of 4,000 July 43 calls for $1.56 and the purchase of an equal number of April 43 calls for $0.30. Volume was below open interest in the April contracts, indicating that an existing short position was closed and rolled toward in time.

The trader probably owns shares in the small-business lender and sold the contracts as part of a covered call trade. The strategy lets the investor earn income while holding the stock, though the position limits the amount of money that can be made in a big rally.

Today's adjustment keeps the investor in the trade for an additional three months and provides a credit of $1.26. (See our Education section)

CIT is off 0.14 percent to $42.20 in afternoon trading. It's up 9 percent this year but has been stalling around the same level where it peaked several times since late 2010. That could be leading some chart watchers to believe that it will face resistance.

Total option volume is 9 times greater than average 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.

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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