Options Trading News

February 27, 2012  Mon 2:46 AM CT

DreamWorks Animation rallied nicely last week, and now buyers are returning as the studio's shares pull back.

optionMONSTER's Heat Seeker monitoring program detected the purchase of about 2,400 June 22.50 calls for $0.63 and the sale of an equal number of June 15 puts for $0.23. Volume was more than twice open interest in both strikes.

The trade resulted in a cost of $0.40 and is similar to owning shares in the movie company. It will make profit if the stock rallies above $22.50 and will lose money below $15. Both contracts will expire worthless if it remains between those two levels.

DWA fell 0.41 percent to $19.45 on Friday. While the company normally doesn't see many options trade, buyers of the March 20 calls lit up the Heat Seeker on Feb. 15. They proceeded to double as shares pushed higher.

The stock has since fallen and is attempting to find support around the same level where it peaked last month, and some traders may be finding it attractive at these prices. Fourth-quarter earnings are scheduled for Wednesday after the bell.

Overall option volume in DWA was 9 times greater than average in the session, according to the Heat Seeker.
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