Options Trading News

October 12, 2012  Fri 3:16 AM CT

Focus Media has been trapped in a fairly tight range in the last two months, but a long-term trade is positioning for a potential drop.

A trader bought 2,500 April 20 puts for $1.35 and sold 5,000 January 2015 15 puts for $0.65 yesterday, optionMONSTER's Depth Charge system shows. The volume at both strikes was more than open interest, so this is a new put spread.

The position is looking for the stock to fall, but only to $15. If it is below that level at expiration, the trader faces assignment on the other 2,500 short puts and the requirement to purchase the stock. (See our Education section)

FMCN gained 1.2 percent to close at $24.46 yesterday, continuing to climb off support at $23 for the last three weeks. The company, which operates digital advertising screens in China, traded up as high as $26 on Aug. 13 after gapping higher on the announcement of a possible deal that would take it private.

Total option volume in the name topped 20,000 contracts, almost 3 times its daily average in the last month. Puts outpaced calls by 2 to 1. Yesterday's activity follows bullish trading in FMCN on Tuesday.
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