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Markets

Crown Castle faces range-bound play

One investor apparently thinks that the market is overpricing Crown Castle's ability to move.

optionMONSTER's monitoring programs detected the sale of 2,000 January 40 puts for $1.60 and 2,000 January 43 calls for $0.75, resulting in a credit of $2.35. The investor will get to keep that money if CCI remains between the two strike prices. Gains will erode outside of that range, turning to losses above $45.35 and below $37.65.

CCI rose 2.41 percent to $40.39 yesterday and has been grinding in its current range since August 2010. Yesterday's option trade, known as a short straddle , is designed to exploit that sideways move. (See our Education section)

At the same time, the implied volatility in the owner of cell-phone towers has been increasing and now stands at about 33 percent--significantly higher than its 24 percent historical volatility. That probably also attracted the strangle seller because it suggests that the market is overestimating CCI's ability to move.

Total option volume in the name was triple the daily 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 Nasdaq, Inc.

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


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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