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Put seller targets key level for Dish

By: optionMONSTER
Posted: 2/4/2013 10:57:00 AM
Referenced Stocks: DISH

One investor is targeting the key $34 level on Dish Network's chart, where the stock peaked last March and bounced in November.

Today optionMONSTER's tracking programs show the sale of 2,500 March 34 puts, most of which priced for $0.75. Volume was almost triple open interest in the strike before the day's trading began, clearly indicating new activity.

Selling puts is like writing insurance on a stock. If DISH falls to $34 by expiration, the investor will have to buy it for that price. But if it doesn't, he or she keeps the premium and the contracts will expire worthless.

The strategy is often used when traders like a stock but don't want to shell out cash getting long. Selling the puts now lets them make some money in the near term, while also programming a buy order at a level they'd want to purchase anyway . (See our Education section)

DISH is down 1.09 percent to $37.27 in morning trading. The satellite-TV operator's stock is up 29 percent in the last year, with subscriber gains strengthening its financial performance recently.

The put selling dominates option activity in the stock so far today, accounting for more than 90 percent of total volume.