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Little upside seen in Tempur-Pedic

Chris McKhann (chris.mckhann@optionmonster.com)

Last week they were buying puts, and now they're selling calls in mattress maker Tempur-Pedic International.

optionMONSTER systems shows heavy volume in the May 47 calls. A block of 1,000 traded for $2.95, followed by another 1,000 for $2.90. Both were below the bid prices at the time, indicating they were sold. The open interest at that strike had been just 54, so these were new positions.

The activity probably occurs against an existing long position in TPX shares as a covered call . The seller then is bullish, at least up to the strike, but ultimately sees shares moving sideways and is looking to collect the volatility premium. (See our Education Section .)

TPX rose 1.56 percent to $46.16 in late morning trading and is at its highest price since gapping lower in May. Shares have been trending up from the low around $21 set shortly after that.

Last Wednesday , our Depth Charge system detected a large bearish trade in the April contracts.

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