Trader shows confidence in News Corp.

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News Corp. has been pushing higher, and one investor likes it over the long haul.

optionMONSTER's monitoring systems detected the sale of 16,000 January 16 puts for $0.47. An equal number of July 18 puts was bought at the same time for $0.07, but volume was below open interest at that strike.

This suggests that the investor had previously sold the shorter-dated contracts, looking for the media company to remain above $18. Now that it's held that level, he or she closed the position and is rolling it forward in time to collect an additional credit of $0.40.

NWSA rose 1.19 percent to $20.48 yesterday. It's up 6 percent so far this month and is back near the level where it peaked in May. The company's earnings have been strong thanks to its movie studios and cable business. Some investors may expect conditions to remain positive as the 2012 presidential elections draw viewers to its top-rated Fox News channel.

Selling puts is a common way to profit from such an expectation because it allows the investor to milk income from the passage of time. Another result of yesterday's put roll is that the trader lowered by $2 the strike price at which he or she will be forced to buy shares in the event of a pullback. (See our Education section)

Overall option volume was 22 times greater than average in the session.



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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: NWSA

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