Lexmark struggled at $38 last month, and traders remain wary of that level.
optionMONSTER’s scanning programs detected the sale of 2,800 December 38 calls in volume well above previous open interest of just 227 contracts. Premiums fell from $0.35 to $0.30 as the paper crossed, which shows the strong selling pressure.
The investor probably owns shares in the printer company and is selling the contracts to manage his or her risk in a covered-call strategy. The trader is now on the hook to unload stock for $38 if it’s above that level on expiration. Including the premium earned, the exit price would be $38.35 to $38.40.
— Option Monster