Markets

Bulls make low-cost bet on DirecTV

DirecTV is down big since mid-July, and the bulls are tuning in for a rebound.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 2,500 October 47 calls for $0.36 and the sale of an equal number of October 41 puts for $0.65. Volume was more than 10 times open interest in both strikes.

The trade, which resulted in a credit of $0.29, is a low-cost bet that the satellite-television stock will rally in the next five weeks. It will be make money to the upside and lose money to the downside, but its correlation to the underlying shares will diminish as time passes. If DTV stays between $41 and $47 by Oct. 21, both calls and puts will expire worthless.

The stock fell 0.3 percent to $43.70 on Friday. It peaked at an all-time high of $53.40 two months ago but then crashed along with the rest of the market in early August. Since then it's been finding support at around its old peak from last December, which could lead some chart watchers to believe that it's still in an uptrend.

The bullish trade accounted for 90 percent of DTV's options volume in the session, according to the Heat Seeker.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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