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This column was originally published on RealMoney on Sept. 26 at 3:03 p.m. EDT. It's being republished as a bonus for readers.

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keep rolling along, up another 1% today and nearly 30% since its June lows, and so does its option activity.

In the comment section in one of

yesterday's posts, a reader wondered what the "big volume" was in Microsoft's April $25 calls, which traded some 45,000 contracts yesterday. My response was to note that both the October $22.50 and January $20 calls each saw some 25,000 contracts trade against much larger open interest in those strikes. This suggests the April volume might be the result of someone rolling up and out of the October and January calls and "a check of open interest numbers tomorrow might provide some clues" about the trade.

Sure enough, this morning, open interest in both the October $22.50s and January $20 calls has declined by about 20,000 contracts in each strike, while the open interest in those April $25 calls increased by 40,000 to 64,000 contracts.

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And the big trade in Microsoft options today is also a spread across different months in which the November $27.50 and January $27.50 calls each traded 13,000 contracts. But this does not appear to be a roll, but rather the purchase of this calendar spread in which someone sold the November and bought the January for a net debit of 45 cents.

The point is that it's always very difficult to tell exactly what a particular option trade might mean. It's important to check volume in other strikes and changes in open interest, which won't appear until the following day, for clues. And more often than not, a large-volume trade is accompanied by some offsetting transaction, so be careful before reading too deeply into it or using it as a predictive tool.

Steven Smith writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback;

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