Unusual Covered Call Opportunity In Agilent
According to Options and Volatility, shares of Agilent Technologies Inc (NYSE: A) saw unusually high options activity on Wednesday. Notably, the July 40 calls traded 7,150 contracts versus only 481 open interest. The July 42.50 calls traded 6.198 contracts as well, with August call options also seeing above average volume.
In addition to the increased volume, the implied volatility on the July 40 calls rose dramatically, moving from 16.72 on Monday's close to 32.40 on the close Wednesday, an increase of nearly 94 percent. This set up a covered call opportunity, buying shares of Agilent and selling a July 40 call for each 100 shares purchased.
Options and Volatility noted this captures a 1.74 percent edge and positions bullishly along with the large call buyer.
The July 40 calls have a delta of 54, while the covered call position has a slightly less bullish delta of 46.
Agilent goes ex-dividend Friday, with a $0.10 dividend.
Anyone buying the stock before Thursday's close would also receive the dividend.
Shares of Agilent closed at 40.19, up 0.59 on Wednesday.
Disclosure: The author had a long position in A at the time of publishing.
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