A large trader is positioning for Time Warner Cable to take a
optionMONSTER's tracking programs detected the sale of about 5,000
September 115 puts for $4.30 and 5,000 September 120 puts for
$3.20. Volume was more than 6 times open interest at each strike,
indicating that new positions were initiated.
The transaction resulted in a credit of $7.50, which the investor
will keep as profit if the shares remain between $115 and $120 on
expiration. Gains erode outside that range, turning to losses below
$107.50 and over $127.50. Known as a
, the trade is an example of how options can be used to make money
passage of time
rather than a directional move. (See our
section for other market-neutral strategies.)
TWC fell 0.58 percent to $116.42 yesterday but is up 25 percent in
the last two months. Most of that appreciation occurred in June on
reports that the company might merge with Charter Communications.
Earnings also beat expectations last Thursday, though revenue
The stock touched an all-time high of $120.93 after the results and
has been fluctuating since. That could make some chart watchers
think that shares will now grind sideways in the intermediate term,
helping to explain the short strangle.
Total option volume in the name was twice its daily average in the
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