Liberty Global has been unstoppable for the last two years, and
one investor is looking for more upside.
optionMONSTER's Heat Seeker tracking system detected a surge of
activity in the January 50 calls and the January 55 calls, which
priced for $1.80, and $0.70 respectively. Volume was below open
interest in the 50s and a transaction was canceled in the 55s so
there are a few different potential interpretations, but all of
them are bullish.
One is that the lower strike was bought and the higher strike was
sold. That would have been a bullish call spread, with a net cost
of $1.10 and the potential to earn a maximum profit of 355 percent
if LBTYA closes at or above $55 on expiration.
Another possibility is that a long position in the 50s were sold
and 55s were bought, which would have been a call roll. That trade
would have resulted in a credit of $1.10.
A third explanation is that the investor owns shares in the global
broadband company and had sold the 50s as part of a covered call
and rolled the position to the higher strike. That would let them
collect an addition $5 of upside on the stock in return for paying
LBTYA fell 1.44 percent to $42.99 in early afternoon trading, and
is still below that key $50 level where the trades start to make
money. It has more than quadrupled since the market bottomed in
March 2009, and is approaching its previous all-time high of $45
established in July 2007.
Overall option volume in the name is 133 times greater than average
so far today. The call trade accounted for all the activity aside
from 2 puts, so the sentiment is clearly bullish.
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