Is Liberty Global going higher or lower? Not much of either, if
one big investor is right.
optionMONSTER's tracking systems detected the sale of 10,000
October 27.50 puts for $0.70 and a matching number of October 32.50
calls for $0.35, resulting in a total credit of $1.05. There was no
open interest in either strike before the transaction priced.
LBTYA fell 0.61 percent to $29.53 yesterday. The provider of voice,
video, and Internet services in foreign countries is up 12 percent
in the last month but is now stalling at the same $30 level where
it peaked in April. It was also where the stock was valued in
September 2008, immediately before panic swept the financial
Given the long-term importance of this price area on the chart,
traders may expect LBTYA to move sideways for an extended period
before continuing higher. Yesterday's option trade, a short
strangle, is designed to earn income from the shares doing
The investor will make the most money if the stock stays between
$27.50 and $32.50 through expiration. However, thanks to the
premium already earned, they're protected all the way down the
$26.45 and up to $33.55. (See our Education section)
The trade came one day after the company reported second-quarter
results that appeared to be slightly worse than analysts had
predicted. The strangle pushed total options volume in LBTYA to 8
times greater than average.
(Chart courtesy of tradeMONSTER)
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