Big volatility play tunes into Viacom
David Russell | email@example.com
optionMONSTER's tracking systems detected the purchase of 60,000 December 60 calls for $0.50. Less than two minutes later, a large block of shares was sold, indicating the use of a so-called delta-neutral trade.
Being long the calls and short the stock makes the trader agnostic on the share price. Instead, he or she stands to profit from higher implied volatility, which will drive up the price of the calls. (See our Education section)
VIAB rose 1.64 percent to a new record close of $55.21 yesterday. The media stock spent most of 2012 in a range between $45 and $49 but caught fire in early August and has been rallying since then.
Implied volatility has also remained very low at about 18 percent, and yesterday's delta-neutral trade apparently expects an increase heading into the next quarterly report in early November.
Overall option volume was more than 44 times greater than average in the session.