OptionsHouse

Options Trading News

October 7, 2011  Fri 1:20 PM CT

LVLT: SEE CHART GET CHAIN FIND STRATEGIES
Shares of Level 3 Communications have seen large price swings this week, but one trader is looking for it to calm down.

optionMONSTER's monitoring system detected the sale of 6,600 November 1.50 calls for $0.25 to $0.30 and an equal number of November 1.50 puts for $0.05 to $0.10. Volume was more than twice open interest in both strikes.

LVLT is up 2.8 percent to $1.66 in afternoon trading. The broadband communication company spiked as high as $2.40 on Wednesday, followed by another push to $1.85 yesterday. Both times the shares quickly met with selling and fell back toward their recent range.

All that movement has pushed up implied volatility to about 85 percent from about 75 percent, which has also boosted premiums. Traders often sell calls and puts when they think that options are pricing in too big a move.

Known as a short straddle, the position is an example of a market-neutral strategy that makes money from the passage of time rather than a direction move. (See our Education section)

Overall option in the name is 4 times greater than average so far today.
Share this article with your friends


Related Stories

LVLT

How bulls cleaned up in Level 3

July 21, 2015

The data-service provider has been on the rise since testing its 200-day moving average in early July and has more than doubled since August 2013 amid rapid top-line growth.

OptionsHouse

Premium Services

Archived Webinar

Education & Strategy

Options Academy: At the Break

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

View more education articles »