Lions Gate Entertainment has fallen hard, but the bulls are
looking for a bounce.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 13,300 April 26 calls for $0.80 and the sale of an
equal number of April 31 calls for $0.10. Volume was more than
twice open interest at both strikes, indicating that new
positions were initiated.
Known as a
bullish call spread
, the trade cost $0.70 and will inflate to $5 if shares close at
$31 or higher on expiration. That would be a profit of more than
700 percent from the entertainment stock moving less than 25
percent. (See our
section for more on the leveraging power of options.)
LGF fell 3.23 percent to $25.20 on Friday and has lost more than
18 percent of its value in the last month. It's been falling
along with other media companies money shifts from consumer
discretionary stocks into emerging markets and energy.
The benefit of using the spread is that the trader risks only a
small amount of capital. He or she may have been one of the many
investors who're unloading media names but wants to keep some
exposure in case LGF rebounds.
Total option volume was 6 times greater than average in the
session, according to the Heat Seeker, with calls outnumbering
puts by a similar proportion.
LGF also saw a bullish transaction
earlier in the month
, with investors more than doubling their money in less than a
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.
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