Options Trading News

June 5, 2013  Wed 4:45 AM CT

As shares of Time Warner Cable attempt to hold above a key level, one trader is betting on a big rally in the next four months.

optionMONSTER's Heat Seeker system detected the purchase of 4,854 October 115 calls in a single print for $0.43 yesterday. The volume was well above the strike's open interest of 2,854 contracts before the trade appeared, showing that this is a new position.

These long calls, which lock in the price where traders can buy the stock, are looking for TWC to rally above $115.43--more than 21 percent higher than yesterday's close. But if it remains below the $115 strike price through mid-October, the contracts will expire worthless. (See our Education section)

TWC rose 0.06 percent yesterday to finish at $95.23 after dipping below its 200-day moving average briefly intraday for the second session in a row. Shares of the cable operator have been bouncing in a wide range since last November, between about $85 and $101.

Total option volume in the name topped 6,100 contracts in the session, more than 7 times its daily average for the last month. Calls outnumbered puts by 11 to 1, a reflection of the day's bullish sentiment.
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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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