Options Trading News

November 2, 2012  Fri 2:45 AM CT

Shares of Boingo Wireless have plummeted more than 40 percent in the last seven months, but one trader is betting that the stock will hold current levels.

optionMONSTER's detected the sale of 3,000 February 7.50 puts in less than 2 minutes yesterday, dominated by a single print of 2,755 that went for $0.80. There was no open interest in the strike before the trade, so this is a new position.

WIFI rose 3.55 percent yesterday to close at $7.58. The wireless carrier gapped down from $9 on Aug. 9 after its last quarterly report, hitting a 52-week low of $6.51 that day. The stock, which was above $13 in late March, has been trading sideways with its 50-day moving average for the last two weeks.

Yesterday's put seller is betting that the stock will close above the $7.50 strike price at expiration in mid-April 2013. If WIFI is below that level, the trader faces the requirement to buy shares at an effective price of $6.70 once the credit from the put sale is factored in. (See our Education section)

Boingo is scheduled to release third-quarter results next Thursday after the close.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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