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