Breakout seen for Time Warner Cable

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Time Warner Cable has been pushing resistance, and one investor is looking for a breakout in this holiday-shortened week.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 2,600 January 67.50 calls for $0.15 and the sale of about the same number of January 62.50 puts for $0.10. Volume was more than 10 times open interest in both strikes.

The trade cost about $0.05 and will profit from a short-term rally in the cable-television stock. The investor will enjoy major leverage if it pushes above $67.50 but will lose money below $62.50.

Timing is the most noteworthy element about the strategy because it requires a move by Friday or it will expire worthless. The company's next earnings report won't take place until the following week, on Jan. 26.

TWC rose 0.91 percent to $65.43 on Friday. It's been pushing against the same level where it peaked on Dec. 5, which could make some chart watchers expect a quick move if it it's broken.

Option volume was more than 8 times the average amount in the session, according to the Heat Seeker.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: TWC

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