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