Virgin Media faces range-bound trade

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Virgin Media is stuck between two levels, and one trader apparently thinks that it will remain trapped in that range.

optionMONSTER's tracking systems detected the sale of 5,000 March 24 puts for $0.26 and 5,000 March 25 calls for $0.52. Known as a short strangle, the trade resulted in a credit of $0.78.

The investor is betting that the entertainment and communications company will remain between $14 and $15 for the next 2-1/2 weeks. The trader has leeway down to $23.22 and up to $25.78 before losing money.

VMED fell 0.28 percent to $25.07 yesterday. It leapt after its last earnings report beat estimates on Feb. 8 but has drifted lower since then. Shares have remained above their 100-day moving average but failed to break through resistance at their falling 200-day moving average.

Some chart watchers may now expect the stock to remain between those two levels. Short strangles are a common way to profit from such a pattern. (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: VMED

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