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Trader sees cap on Nationstar Mortgage

Chris McKhann (chris.mckhann@optionmonster.com)

Shares of Nationstar Mortgage Holdings is pushing back toward recent highs, but one large trader apparently sees limited upside.

optionMONSTER systems show that more than 17,000 NSM options have traded, compared to a daily average of 2,300. Most of that action has been in the May 40 calls, where more than 14,000 have traded in volume that is triple the strike's previous open interest. The big print of 13,075 was sold for the bid price of $0.70.

The calls aren't tied to any trading in the underlying stock that we can see so far today, so they could have been sold naked with an initial bearish bet. Alternatively, the options could have been traded against an existing long position as a covered call , which would be bullish up to the strike price but not beyond. (See our Education section)

NSM is up 3.6 percent to $38.18. The Texas-based residential loan servicer fell to support at $32.50 several times in the last six weeks, but it appears to be climbing back toward the high above $42 set in mid-February. 

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