Patient bull targets Liberty Global

By David Russell,

Shutterstock photo

Liberty Global established support near $22.50 in May, and now one trader is using that level to place a long-term bullish bet on the satellite-television company.

optionMONSTER's Heat Seeker tracking system detected transaction that will let the investor collect an initial payment and then make additional profits if LBTYA rallies over a certain point. The trader won't have to pay a cent as long as it stays above the lows from May.

LBTYA Chart He or she sold 20,000 January 22.50 puts for $1.05 and purchased an equal number of January 35 calls for $0.60 to $0.65. Volume was more than 20 times open interest in both strikes.

The option strategy, known as a bullish combination, generated $0.40 to $0.45 of premium for the investor and will give them exposure to unlimited upside if LBTYA closes above $35 on expiration. The position also could lose money if the stock falls below $22.50.

The shares rose 1.46 percent on Friday and are up 10 percent in the last month. They've fluctuated on either side of $25 since September while trading in an increasingly tight range and holding support at their 200-day moving average (red line on chart). Some technical traders may view the price action as consolidation within a larger uptrend and expect further gains in coming months.

The combination trade pushed total options options volume in the thinly traded name to 164 times greater than average.

LBTYA reported better-than-expected revenue growth on May 6, fueled by strong demand for new broadband products and subscriber growth in Europe. The date for the next earnings release hasn't yet been announced.

(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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