This Week's Options Trade of the Week From Jay Soloff

05/29/2020 9:03 am EST


Jay Soloff

Options Portfolio Manager, Options Floor Trader PRO

Looking at options block trades can be a useful way to see what big investors and funds are doing in the options market. Recently, a large trader bought 2 million shares of Bank of America (BAC) while selling 20,000 January calls at the same time. This is likely a covered call trade and suggests that BAC could trade in a range until next year. It protects the stockholder to the downside to some extent, but also caps the upside potential for owning the stock. Most importantly, the trade allows the covered call buyer to generate income while holding the stock beyond what is only offered through the dividend.

Jay Soloff is the Options Portfolio Manager at Investors Alley. He is the editor for Options Floor Trader, an investment advisory bringing you professional options trading strategies, with all the bells and whistles of Wall Street, but simplified so all you have to do is enter the trades with your broker. 

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