A large trader apparently thinks that CBS is heading higher.
optionMONSTER's Heat Seeker monitoring program detected activity in
the November 17 puts and the November 21 calls, with 5,000 trading
in each. There was barely any open interest in either strike before
the trade appeared.
The puts were sold for $1 to $1.10, while the calls were bought for
about the same price. The resulting position cost essentially
nothing to open and is similar to owning shares in the media
company. The main difference is that if CBS remains between $17 and
$21 through Nov. 18, both calls and puts will expire worthless.
The trade is an example of how investors can use options to create
highly leveraged strategies tailored to specific time horizons. In
this case, the position will have long exposure in time for the
next earnings report the afternoon of Nov. 3. The last time results
came out on Aug. 2, CBS crushed estimates thanks to strong ad
spending and content distribution deals.
CBS closed at $19.59, up 3.38 percent on the day, but it has lost
more than one-third of its value over the last three months.
The bullish trade pushed overall option volume in the name to
nearly 6 times greater than average yesterday.
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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