MetroPCS Communications reports earnings tomorrow morning, but
one trader apparently thinks that it will be a snooze.
optionMONSTER's tracking systems detected the sale of 4,000 April
10 puts for $0.61 and 4,000 April 12 calls for $0.15. That totals
$0.76, which the investor will keep as profit if the
wireless-communications carrier closes between the two strike
prices at expiration. Gains will erode outside that range, turning
to losses below $9.24 and above $12.76.
The strategy stands to benefit from an uneventful earnings report
because that would cause
, and therefore option prices, to drop. Known as a
, the trade is designed to make money from the
passage of time
rather than a directional bet. (See our
PCS fell 1.29 percent to $9.95 on Friday. Shares have traded mostly
between $9.50 and $10.50 for the last three months.
It's noteworthy that the trader chose the $10 and $12 levels in the
short strangle because it suggests an expectation for modest upside
in the next eight weeks. The trade accounted for more than 80
percent of the option volume in PCS on Friday.
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