A huge call spread sees limited upside in CommonWealth REIT.
optionMONSTER systems show that a block of 24,379 July 27.50 calls was bought for the ask price of $0.10 against previous open interest of 27,603. Three seconds later, 24,379 October 27.50 calls were sold for $0.40 on a wide bid/ask spread in volume far above that strike's open interest of just 382 contracts, so this is clearly new activity.
The trader is rolling a short-call position forward by three months. These contracts could have been sold naked with an initial bearish bias, but they were far more likely traded against long shares in a covered-call strategy that is bullish up the $27.50 strike price but not beyond. (See our Education section)
CWH fell 0.35 percent to $25.91 yesterday. The real-estate investment trust has been steadily losing ground for the last few weeks after reaching a 52-week high of $28.28.
Yesterday's total option volume in CWH was 52,890, compared to a daily average of just 168 contracts for the last month.
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