A generic image of a calculator and a pen
Markets

Trade extends bet on Sony rebound

One investor is underwater in Sony but seems determined not to give up.

optionMONSTER's monitoring programs detected the sale of 5,200 April 17 puts on the electronics giant for $1.05. Some 2,000 contracts were bought at the same time for $2.73 at the January 21 line, but volume was below open interest, which suggests that an existing short position was closed in that strike.

It appears that the investor had previously sold the January puts when SNE was at a higher price, looking for the stock to hold its ground. But it then proceeded to drop, and the trader now faces the risk of being forced to purchase shares for $21.

Rolling the position forward gives the investor an additional three months for a rebound to occur, while lowering the strike price at which he or she would be required to buy shares. The trader also increased the number of contracts, which resulted in the transaction costing nothing to implement.

Overall, it means that the trader is putting more capital at risk for more time, determined to see the original bet pay off. The trade pushed overall option volume in SNE to 11 times greater than average.

SNE rose 4.81 percent to $18.53 yesterday. It has lost almost half of its value so far this year but recently bounced slightly above the same level where it bottomed out in early 2009.

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.

In This Story

SNE

Other Topics

Options

Latest Markets Videos