Magna International has fought its way back to where it traded
before the 2008 stock-market crash, and one investor is taking
optionMONSTER's tracking systems detected the sale of 7,100
September 60 calls for $16.30 against open interest of just 348
contracts. The trade pushed total options volume in the auto-parts
maker to 21 times greater than average.
MGA fell 0.60 percent to $75.81 yesterday. It's more than
tripled off its 2009 lows, but the gains have slowed recently as
the shares hit resistance around the same levels where they peaked
before the subprime crisis drove equities over the precipice.
MGA company reported better-than-expected earnings, raised
guidance and boosted its dividend on Aug. 6. But since then it's
been moving sideways and failed to make new highs.
Thursday's options were probably sold by an investor seeking to
unload shares. Writing in-the-money calls is a common method for
timing a sale and locking in an exit price.
The transaction gives him or her the right to divest 710,000
shares. Selling that amount of equity may have been difficult
without impacting price because MGA's average daily volume is just
766,000 shares. See our Education Section for other examples of how
investors can use options to manage portfolio risks.
(Chart courtesy of tradeMONSTER)
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