Mobile Telesys has been moving much more than its options imply, and one investor is looking for that disparity to narrow.
Our tracking systems detected the purchase of 3,000 June 15 calls for $2.05 and 3,000 June 15 puts for $2, resulting in a total cost of $4.05. There was barely any open interest in either strike before the transactions occurred.
Known as a straddle , the trade is designed to profit from an increase in option prices rather than a directional move in the Russian telecom stock. MBT's implied volatility is about 34 percent, versus a 57 percent historical volatility reading. That suggests the options are too cheap relative to its propensity to move.
The strategy especially makes sense because longer-dated options are more sensitive to changes in implied volatility. (See our Education section)
MBT fell 5.68 percent to $15.43 yesterday. Total option volume was about 17 times greater than average in the session.
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