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ADT given room to keep climbing

David Russell (david.russell@optionmonster.com)

ADT has been working higher, and one investor wants to give it more room to climb.

optionMONSTER's tracking programs detected the sale of 1,150 April 41 calls for $1.11 and the purchase of 1,150 January 40 calls for $0.91. Volume in the January contracts was below previous open interest, which suggests that an existing short position was closed and rolled forward in time.

The investor probably owns shares in the home-security company and had previously sold the January 40s as part of a covered-call trade . Yesterday's adjustment let him or her collect an incremental $0.20 of premium while raising the eventual exit price by $1. It also committed the investor to an additional three months in the trade. (See our Education section)

ADT rose 0.63 percent to $36.64 yesterday. The stock lost about half its value between March 2013 and March 2014 but has been working its way higher since. Much of that drop followed a poor quarterly report on Jan. 30, but more recent numbers have been better.

Total option volume was quadruple the daily average, with overall calls outnumbering puts by 18 to 1.

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