More upside seen in News Corp.

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News Corp. has been rallying since its last earnings report, and one investor is positioning for even further gains.

NWSA Chart optionMONSTER's Heat Seeker tracking system detected the purchase of 5,000 June 17 calls for $0.345 and the sale of an equal number of July 14 puts for $0.255. The trade resulted in a net debit of $0.09 as volume was more than 13 times open interest in both strikes.

NWSA fell 3.36 percent to $15.70 in morning trading. The media conglomerate is up 27 percent since Feb. 2, when profit and revenue beat forecasts and management raised its full-year guidance. The next earnings report is scheduled for after the bell on May 4.

Today's options strategy includes elements of a diagonal spread with a combination trade, letting the investor earn more premium to offset the cost of the contracts that were purchased. The trader will double the money for every $0.09 that NWSA closes over $17.09 on June expiration but will face losses if the stock closes below $14 on July expiration.

If June puts had been sold instead of the July contracts, it would have cost about $0.19 and thus provided less leverage.

The transaction pushed overall options volume in NWSA to 13 times greater than average.

(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 The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: NWSA

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