Call volume spiked in PPL and NiSource on Friday as investors wrung income from the utility stocks.
PPL was the first to appear on optionMONSTER's tracking systems with the purchase of about 1,200 January 35 calls for $0.80 and the sale of an equal number of July 37 calls for $0.80. Volume was below open interest in the nearer-dated contracts, which indicates that an existing short position was closed and rolled forward in time.
The investor almost certainly owns shares in the Pennsylvania-based utility and was using the options as part of a covered-call strategy . Making the adjustment let him or her raise by $2 the level at which the stock must be unloaded, while staying in the trade for an additional six months. During that time, the investor will also collect its 4 percent annual dividend yield. (See our Education section)
NI hit Less than 30 minutes later. This time, 2,080 January 41s were bought for $1.45 and 3,570 April 45s were sold for $0.575. While the sizes are different, a similar bet was probably at work.
PPL declined 0.51 percent to $35.35 and NI fell 0.98 percent to $42.51. Total option volume was quadruple normal amounts and more than 11 times average in NI.
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