One investor is selling puts in Time Warner as the media stock
returns to levels last seen when the tech bubble was deflating.
optionMONSTER's tracking programs detected unusual volume in the
October 41 puts, with 10,250 contracts trading against open
interest of 1,724 contracts. They all changed hands for the $0.31
bid price, indicating that they were sold.
The investor is now on the hook to buy shares in the media company
for $41 if they close below that level on expiration. But including
the premium already received their entry price would be $40.69.
Should the stock remain above $41, they'll keep the $0.31 credit
and options will expire worthless.
is a common strategy when investors like a stock but don't want to
expend capital getting long right away. It lets them program an
entry at a lower price if a pullback occurs, while also letting
them make some money if it never touches to their desired level.
TWX is down 0.3 percent to $43.51 in morning trading but is up 23
percent in the last three months. Earlier in the session it touched
$43.84, its highest level since mid-2001. Today's put sale pushed
total option volume in the name to more than triple the daily
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.