At the time Encana Corporation was trading at 20.30 with an IV of 29.85 earlier today, a customer executed a buy-write buying the underlying and selling the ECA Oct 23 calls at .90.? The trader is making a bet that the stock will either not fall or slowly rally for the next 7 months.? IF the stock were to rally to somewhere north of 23. The trader would make a 20% return on his or her 7 month buy write, annualized the return is about 35%.
This trade should be viewed as mildly bullish and aggressively bearish volatility on Encana Corp.? Traders looking to piggy back could consider a more near term sale of an ATM or OTM put and then using that to either collect premium or to begin a wheel trade.