Bullish Calls Trade in DXM
Earlier today Dex Media Inc. was trading at 9.50, up .60. A customer closed and rolled short call position.? The trader bought to close the December 9 calls for .60 5000 times and against it sold 5000 of the Jan 10 calls at .30.? Thus the trader paid .30 for the roll
This trade is likely against an underlying long position where the trader is long the underlying and short the calls to produce income.? This trade should be viewed at mildly bullish the stock and mildly bearish volatility between now and January expiration.
Traders looking to piggy back this trade could consider buying the Jan 9/10 call spread for .45.
Synthetic Covered Call in SD
A customer sold 16,000 Sandridge Energy (SD) March 3 puts at 1.40.? With the stock trading 1.80, this appears to be a synthetic covered call. The trader is collecting .20 of premium over parity and appears to be willing to take delivery on SD if it settles anywhere below this 3.00 level
This trade should be considered bullish SD over the long run and bearish volatility as the customer appears to think there is some type of ceiling in the name at 3.00.
Traders looking to piggy back this trade could buy the Mar 2/3 call spread for .20 which would have a 4 to 1 risk reward if the underlying did in fact rally toward 3.00
Looking for a Rebound in WLL
Whiting Petroleum Corp was trading 30.40, up .33, when a customer bought just over 8300 of the January 35 calls paying 1.90.? This appears to be an outright call purchase. The customer is betting that WLL will rebound between now and January expiration.
This trade should be considered aggressively bullish the underlying and bullish volatility as for these calls to expire profitable WLL would need a rally of over 20%.
Traders looking to piggy back could consider buying the Jan 30/35 call spread for 1.90 which has higher odds of success and a favorable risk reward