OptionsHouse

Options Trading News

October 3, 2012  Wed 4:14 AM CT

DISH: SEE CHART GET CHAIN FIND STRATEGIES
One option trader wants leverage in Dish Network, which has been steadily working its way higher all year.

optionMONSTER's tracking programs detected the purchase of 2,000 January 32 calls for $1.74 and the sale of an equal number of January 25 puts for $0.60.

Calls become more valuable when shares climb because they lock in the price where a stock can be bought. Put lose value to when a stock rises because they guarantee a minimum selling price. Buying calls and selling puts provides upside leverage on both sides of the trade because the long calls will appreciate in a rally while the short puts lose value.

The net result of yesterday's trade is that the investor now controls the equivalent of 200,000 shares in the satellite-television company for just $1.14 each. If the stock doesn't move, however, the entire position will become worthless when it expires early next year. (See our Education section)

DISH rose 1.32 percent to $30.69 yesterday and is up 23 percent in the last year. The stock has been trending steadily higher and now seems to be forming support around its 100- and 200-day moving averages just below $30. That could be leading some chart watchers to expect the gains to continue.

Total option volume in the name was twice the daily average, according to our data systems.

(A version of this post appeared on InsideOptions Pro yesterday.)
Share this article with your friends


Related Stories

DISH

Limited downside seen in Dish Network

May 12, 2016

The satellite-network operator is up 17 percent in the last three months, and traders are betting on a floor in the stock through mid-June.

DISH

Dish Network gets vote of confidence

May 3, 2016

The satellite operator is up 7 percent in the last month, and traders apparently believe that downside potential will be limited for the next several weeks.

DISH

Traders look for possible pullback in Dish

April 28, 2016

The satellite network has rallied 7 percent just in the last week, but tradres apparenly believe that a drop may be coming by mid-June.

OptionsHouse

Premium Services

Education & Strategy

Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »