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What's behind call selling in Caesars

Chris McKhann (chris.mckhann@optionmonster.com)

Caesars Entertainment has been on a scorching run for months, but one trader apparently believes that further gains will be limited.

optionMONSTER systems show that a trader sold 4,000 January 22.50 calls for the bid price of $2.20 today. There was no open interest at that strike, so this was a new position.

The calls could have been sold naked if the trader is sure that the level of $22.50 won't be breached, but they were more likely sold against long shares. The latter would create a covered call position that would be neutral to bullish, not anticipating much upside above that strike price. (See our Education section)

CZR is down 2.39 percent to trade at $17.13 in early afternoon trading. The casino operator was below $5 in mid-November but hit an all-time high of $18.37 on Monday.

Exactly 6,400 CZR options have traded as of this writing, with only 401 puts.

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