Call selling targets ceiling in utility fund
Traders apparently believe that upside potential is limited in the SPDR Utilities Fund.
Our market scanners show that about 9,000 February 47 calls were sold mostly for $2.29 at the same time yesterday. Volume surpassed the strike's open interest of 6,516 contracts, indicating that this is a new position.
Short calls generate income and lock in the price where a stock must be sold. The trade is usually done in conjunction with long shares in a covered-call strategy, reflecting a belief that gains will be limited through expiration. (See our Education section)
XLU rose 0.08 percent to $48.65 yesterday and is up 5 percent in the last month. Overall option volume in the fund was about average.
More From optionMONSTER
