What's behind heavy LSI call selling


A large trader apparently believes that upside will be limited in semiconductor company LSI.

optionMONSTER systems show that more than 10,000 LSI options have traded, compared to the daily average of just 592 in the last month. Virtually all of the volume is in the January 9 calls, where a trader sold 10,000 contracts for $0.22. This is clearly a new position, as the strike's open interest was just 22 contracts before the trade appeared.

The calls weren't traded against any underlying shares identified by our systems today, so this could be naked selling with an initial bearish bias. Alternatively, the options could have been sold against an existing long stock position in a covered call position, which would be bullish up to the $9 level but not beyond. (See our Education section)

LSI is up 0.6 percent this morning to $7.40. The chip maker is climbing back toward levels from last week, when it was just shy of $7.60. Shares were down at $6 before earnings results at the end of April. 

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