Short-Term Skeptic Ups the Ante on EMC Corporation (EMC)

One EMC Corporation option trader rolled her short call up and out

by Karee Venema

Published on Nov 21, 2014 at 1:31 PM
Updated on Apr 20, 2015 at 5:09 PM

EMC Corporation (NYSE:EMC) has tacked on nearly 19% in 2014, and today, the stock is up 0.3% amid a broad-market rally. In spite of this strong technical showing, the stock's recent rally attempts have stalled out near the $31 mark. In fact, the equity topped out at a 13-year peak of $30.66 on Tuesday, but was last seen lingering near $29.93. Against this backdrop, one option trader is betting big on this area to continue resisting EMC's advances over the next month, but is giving herself a little bit of breathing room.

Taking a quick step back, EMC calls are trading at five times the intraday average, and are outpacing puts by a nearly 7-to-1 margin. The majority of the day's action has centered on the stock's December 32 call, where 24,758 contracts are on the tape. The bulk of this volume occurred when a massive block of 24,470 contracts was sold to open for $0.18 apiece, resulting in an initial net credit of $440,460 (number of contracts * premium collected * 100 shares per contract).

Diving deeper into the data reveals this block changed hands at the same time a smaller-sized lot of 4,485 November 30 calls was bought to close, and according to Trade-Alert, this activity was a result of one speculator rolling her short call position up and out. By initiating the new short position with the December 32 calls, this trader is expecting EMC Corporation (NYSE:EMC) to churn south of $32 through the close on Friday, Dec. 19 -- when the soon-to-be front-month options expire.


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