Options Trading News

September 23, 2011  Fri 10:48 AM CT

Put selling dominates the option volume in Liberty Media today as volatility remains elevated.

LINTA has already traded 6,585 options less halfway through the session, compared to a daily average of just 1,000. Almost all of the volume was included in one print.

optionMONSTER's systems have detected a single trade of 6,500 November 16 puts that went for $1.05, the bid price on a wide spread, indicating that they were sold. There was no open interest at the strike previously, so this is clearly a new opening position.

LINTA trades at $16.13, flat on the day. Shares of the company, which owns stakes in businesses such as QVC and Evite, have been on the rise since hitting a 52-week low of $12.44 in early August. They did climb as high as $17.50 on Wednesday, their highest level since mid-July.

The put selling is a bet that the stock will remain above the strike price through expiration. The seller then keeps the credit as profit. If the stock is below the strike, the seller then faces the obligation to buy the stock if the position has not been closed beforehand. (See our Education section)
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I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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