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Calls smooth ride for Invesco trade

David Russell (david.russell@optionmonster.com)

Invesco has been working its way higher, and one investor is using options to smooth the ride.

Our tracking programs detected the purchase of 2,500 May 31 calls for $1.05 and the sale of an equal number of July 34 calls for $0.30. Volume was below open interest in the May options but not the July contracts, indicating that an existing short position was closed and rolled to the higher strike.

The investor probably owns shares in the investment-management company, which leapt on a strong earnings report yesterday. Adjusting the trade cost $0.75 and will let him or her make $3 more on the stock. It will also keep the trader in the name for an additional two months. (See the discussion of covered calls in our Education section for more.)

IVZ is up 0.76 percent to $31.98 this afternoon and 13 percent in the last month. Earlier in the session it traded above $32 for the first time since late 2007.

Overall option volume is more than 12 times greater than average so far today, with calls accounting for more than 90 percent of the total.

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