Time is money for FMC investor

optionMONSTER

One investor is turning time into money with chemical stock FMC.

optionMONSTER's tracking programs detected the purchase of about 1,800 October 65 calls for $6.60 and the sale of a similar number of November 65 calls for $6.84. Volume was below open interest in the nearer-dated contracts, so it looks like an existing short position was closed and rolled forward in time.

The investor probably owns shares and sold the options as part of a covered-call trade. The strategy lets them earn income from the stock while also limiting volatility. Nonetheless, it prevents them from profiting to the upside, so the resulting position is quite conservative.

Adjusting the trade let him or her collect $0.24 of income, which is on top of the original credit they received. The investor also have the right to collect FMC's 0.8 percent dividend yield and can also endure a significant pullback without losing a penny. (See the discussion of covered calls in our Education section for more.)

FMC, whose products include insecticides, polymers, and food additives, rose 0.38 percent to $71.69 in early afternoon trading. It's up 27 percent in the last six months and is less than $1 below the all-time highs.

Total option volume is 16 times greater than average so far today, with not a single put trading so far.


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