Income key to strategy in Comerica

optionMONSTER

One investor is milking profits from Comerica as the Dallas lender works its way higher.

optionMONSTER's monitoring programs detected the sale of 3,603 January 30 calls for $5.89 and the sale of an equal number of April 28 calls for $6.94. Volume was below open interest in the 28s but above it in the 30s, suggesting that an existing position was closed and rolled forward in time.

CMA is trading at $35.05 this afternoon, up 2.01 percent on the session and 15 percent in the last three months. Like many financials, it continues to trade for less than book value after the 2008 crash, which has been drawing a steady stream of buyers to the sector.

Today's option trader probably owns shares and previously sold the 28s as part of a covered call strategy. Adjusting the position cost $1.05 and raised by $2 the level at which they will be forced to unload their stock. It also keeps the trader in the position for an additional eight months, during which they can collect CMA's 2 percent dividend yield.

Given that the calls are deep in the money , the strategy is highly conservative and more akin to a fixed-income position than an equity trade. (See our Education section for more on how options can be accomplish a wide array of investment objectives.)

Almost 7,600 contracts have traded in CMA so far today, compared with just 1,040 in a typical session. Calls outnumber puts by 87 to 1.

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