One big investor appparently thinks that DreamWorks Animation is
optionMONSTER's Heat Seeker tracking system detected the purchase
of 7,500 September 20 calls for $1 and the sale of an equal number
of September 15 puts for $0.65. Volume was more than 30 times open
interest at both strikes.
DWA is off 0.39 percent to $17.75 in afternoon trading. The move
studio's stock lost more than 40 percent of its value in 2011 but
has been holding long-term support since then while making
incrementally higher lows. Short interest also represented 29
percent of the float in mid-March, which could potentially fuel
buying if those traders are forced to cover their positions.
doubled their money
with DWA calls in February, but the stock then gapped lower after a
poor earnings report later in the month. Despite the weak results,
some investors may consider the stock attractive because it's
valued at about 1.1 times book value. Most media companies trade
for at least twice that multiple.
Today's option strategy earned an initial credit of $0.35 and will
leverage upside in the stock. It obligates the investor to buy
shares for $17.50 if they fall to that level, but he or she may be
comfortable taking that risk given the valuation and the apparent
support in place. (See our
More than 15,000 contracts have traded in DWA so far today, 31
times the average amount.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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