Bulls stick with winner in Level 3
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,000 January 25 calls for $3.95 and the sale of 4,000 January 20 calls for $8.15. Volume was below open interest at the lower strike, indicating that an existing long-call position was closed and rolled up to the 25s.
The trader is probably sitting on big gains and made the adjustment to better manage risk. Swapping to the higher-strike contracts lets him or her collect a credit of $1.285 million and stay exposed to further upside.
The transaction also increased their potential gains over the long run because they increased the number of contracts owned. (See our Education section on how to make more money with less risk using options.)
LVLT slipped 0.07 percent to $27.94 yesterday, but not before hitting its highest price in almost two years. The provider of broadband services is up more than 40 percent since early April and beat expectations the last time earnings came out in July. The next quarterly report is scheduled for Oct. 30.
Total option volume was 7 times greater than average in the session, according to Heat Seeker. Calls outnumbered puts by a bullish 37-to-1 ratio.