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February 7, 2013  Thu 4:47 AM CT

CBS: SEE CHART GET CHAIN FIND STRATEGIES
CBS has run to levels not seen in more than a decade, and one trader is positioning for even more gains by this summer.

A block of 3,584 March 38 calls traded for $4.40 yesterday while 7,168 June 44 calls were bought for $1.75, according to optionMONSTER's Heat Seeker tracking system. The March options were below the previous open interest while the June contracts were above it.

This indicates that the trader is closing an initial long-call position and opening a new one with twice the number of contracts at a higher strike and later date. The trader probably made a profit on the earlier calls and is using the proceeds to finance the new position, which is now looking for shares to rise above $44.

Long calls lock in the purchase price of the stock no matter how high it may rise, so they can provide significant leverage in a rally. But these options will expire worthless if CBS is below the $44 strike price by expiration in mid-June. (See our Education section)

CBS fell 0.83 percent yesterday to close at $41.98 but is trading at its highest levels since June 2001. The stock gapped up from $38 on Jan. 17 after the media company announced plans to separate its billboard businesses and sell overseas properties, but shares have been hovering around the $42 level since then. Management is scheduled to report fourth-quarter and 2012 results a week from today on Feb. 14 after the close.

Overall call volume in the name outpaced puts by more than 10 to 1 yesterday.
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