Options Trading News

September 30, 2013  Mon 11:07 AM CT

KongZhong is up sharply in spite of today's weak tape, and one trader apparently believes that any downside will be limited in the Chinese digital-entertainment company.

optionMONSTER systems show that 3,300 November 10 puts have been sold for the bid price of $0.30 on a wide bid/ask spread. The volume was twice the previous open interest, so this is clearly a new position.

The put selling is a bet that KONG will hold above $10 through that November expiration. The trader takes on the risk of having to buy shares if they are below that level. (See our Education section)

KONG is up 5.83 percent to $12.86, making up for losses at the end of last week. Shares hit a high of $14.92 at the start of the month but were down at $10 just two days before that peak.

About 3,600 KONG options have changed hands, compared to the daily average of 726 for the last month.
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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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