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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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. 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.

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