OptionsHouse

Options Trading News

May 24, 2013  Fri 9:30 AM CT

NWSA: SEE CHART GET CHAIN FIND STRATEGIES
Someone thinks the rally is over for News Corp.

optionMONSTER's Depth Charge monitoring system detected the purchase of 3,000 October 27 puts for $0.50 and the sale of an equal number of October 32 calls for $2.50. Volume was more than twice the open interest at each strike, indicating that new positions were implemented.

The investor probably owns shares in NWSA and is using the options to hedge against a drop. He or she collected a credit of $2 and now has the right to sell the stock for $27. The trader has also agreed to unload them for $32 if they close above that level on expiration.

Including the credit, the investor now has a minimum selling price of $29 and a maximum of $34. (See our Education section for more on how options can be used to manage risk.)

NWSA is up 0.4 percent to $33 this morning and 70 percent in the last year. The media giant has been sitting near all-time highs since gapping higher after its last quarterly report on May 9.

Today's downside collar trade accounts for almost all of NWSA's option volume in the session so far, according to the Depth Charge.
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »