Crown Castle International has been moving sideways, and one investor wants to profit from the range-bound trade.
optionMONSTER's tracking programs detected the sale of 13,740 October 37 puts for $0.50 and 13,740 October 45 calls for $0.25. Volume was more than twice open interest in both strikes.
Known as a short straddle , the strategy is designed to make money from the passage of time rather than a directional move. It will also benefit from the accelerating pace of time decay that will occur as expiration approaches on Oct. 21. (See our Education section)
The trader collected a credit of $0.75, which he or she will keep if CCI stays between $37 and $45. It hasn't violated that range in the last six months. That $0.75 will provide some protection if it's broken, but only down to $36.25 and up to $45.75.
CCI fell 1.67 percent to $41.25 on Friday and has been holding its ground despite S&P 500's recent drop. The owner of cellular towers has been supported by investor hopes it will transform itself into a real-estate investment trust. Such a move would reduce its taxes and allow it to pay dividends.
The short straddle pushed total option volume to more than 50 times average in the session.
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