Why trader is selling calls in Williams

optionMONSTER

Williams Company is just its off-four year highs this morning, and one trader sees limited upside for the energy company's shares.

WMB is down 0.8 percent at $34.05 after hitting $35.39 earlier today, its highest price since the middle of 2008. Shares were below $28 in late June, matching levels from the first couple of days of 2012.

Total volume in the name tops 41,000, compared to a daily average of 12,000 contracts in the last month. Calls outpace puts by 100 to 1.

Almost all of the action is in the one trade of 40,000 November 39 calls, which were sold for $0.23, according to optionMONSTER's systems. Open interest in the strike was 6,569 at the beginning of the day, so this is a new position.

The call seller is betting that WMB won't be much above $39 at that November expiration. The options may have been sold against long shares as a covered call position, which would be bullish up to the strike price but gives up any gains above that level. (See our Education section)

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