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
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
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
(Chart courtesy of tradeMONSTER)
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