Options Trading News

June 5, 2013  Wed 9:35 AM CT

A large volatility trade is targeting Pandora as the online radio company tries to stem this week's losses.

More than 11,000 July 16 calls have traded so far in volume far above the strike's previous open interest of 686 contracts, clearly indicating new activity. The big print of 8,000 went for the bid price of $0.70, according to optionMONSTER systems.

Less than a minute later, a block of 288,000 Pandora shares traded for $14.50--the exact delta of the option position. The prices are tight, so it is hard to tell if this is a long or short volatility play. Either way, this trader is concerned about the degree of the stock's movement, not a specific direction. (See our Education section)

P is up 0.82 percent to $14.51 after dipping to $14 earlier this morning. Shares were above $17 at the end of last week but fell on reports that Apple is making progress on a competing service.
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The covered call and unhedged risk

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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