Recently, we have seen bullish unusual options activity in KIM. Just yesterday, a trader sold 7,000 KMI Mar 32.5 puts for $1.00. This trader believes that KMI will stay above $32.50 through March expiration. This trade will profit should the stock rally, sit still or sell off as long as it stays above break-even of $31.50. This bullish activity in KMI sets up well as a signal for a covered call.
The Trade:
Selling 1 KMI Mar 32.5 Call at $5.10 for every 100 shares of stock at $37.13
Should the stock stay above $32.50 through March expiration this trade would profit $0.47. The stock owner is also entitled to 2 dividend payments totalling $0.73, so the trade has the potential for a total profit of $1.20 per share. The trade is still profitable anywhere above $32.03.
