Credit: Shutterstock photoOne investor sees resistance on Unilever's chart.
The Dutch consumer-products giant peaked around $35 late last month, and today one investor is selling calls at that level. A block of 8,283 May 35 calls were sold for $1.80 open interest of just 1,029 contracts, according to optionMONSTER's tracking programs.
The move reflects a belief that UN won't advance significantly above that recent high, the stock's best level since early 2008. Given the income received, the trader has essentially agreed to sell shares for $36.80.
UN, which is up 3.12 percent to $34.08 today, has been churning in a range since the spring. Today's call seller probably owns shares in the stock and is using the options as part of a covered call strategy.
The move essentially reduces the volatility of their position, reducing their downside risk but also their ability to profit from a runaway rally. (See our Education section)
Overall option volume is 34 times greater than 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.