Liberty Global seen stuck in a range

By David Russell,

Shutterstock photo

Liberty Global has never traded over $50, and one trader apparently doesn't think that it will anytime soon.

LBTYA LBTYA rose 1.32 percent to $41.39 yesterday and is up 44 percent in the last six months. The broadband-communications stock at one point touched $41.99, its highest price since late 2007. Its all-time peak of $45 was established earlier that year.

optionMONSTER's tracking programs detected the sale of 15,000 January 50 calls for $1.35 and 15,000 January 35 puts for $1.45. Volume was 1,500 times open interest in both strikes.

The trade, known as a short strangle, is designed to earn income from LBTYA remaining between $35 and $50. If it stays within that range in the next year, the investor will get to keep the $2.80 premium collected yesterday. (See our Education section)

He or she may expect the stock to encounter resistance around that old high of $45 and to have support around $30, a level that served as resistance for most of 2010. Because market-neutral trades such as short strangles make money from shares staying in a range, traders often use such chart levels to pick the strike prices. (See this recent story on Crown Castle for more)

Total options volume in LBTYA was 61 times greater than average in the session.

(Chart courtesy of tradeMONSTER)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: LBTYA

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