Central European Media Enterprises has been languishing since
the market crashed in 2008, but now one investor seems to be
positioning from a rebound.
It's a little difficult to interpret the activity because CETV is
thinly traded in the options market and has very wide bid/ask
spreads, but it appears that a bullish three-way strategy has been
Blocks of 2,500 contracts each traded in the May 20 puts for $1,
the October 25 calls for $2.75 and the October 30 calls for $1.
Volume was far above previous open interest in all three strikes.
The October 25s were likely bought, while the other two were
probably sold. If correct, the investor now owns the October 25s
for just $0.75 and stands to earn 567 percent if the stock rallies
to $30 on October expiration. Aside from that initial outlay, the
only way they can lose money is if it falls below $20 in the next
The strategy is interesting because they sold shorter-dated puts,
which will let them benefit from the accelerating pace of time
decay that will occur as expiration approaches. (See our Education
While based in Bermuda, CETV operates television stations across
Eastern Europe and the Balkans. It's up 1.92 percent to $21.73 in
afternoon trading, but is still down more than 80 percent from its
peak in late 2007.
Sentiment has recently been shifting back toward emerging markets,
and today's investor may now be looking for CETV to regain favor.
The trade pushed total option volume in the name to 25 times
greater than average.