Timing an entry with Comcast puts
David Russell | [email protected]
optionMONSTER's monitoring systems detected the sale of about 3,000 June 29 puts in the company's non-voting A shares for $0.65 to $0.75. Volume was more than 28 times open interest in the strike.
CMCSK fell 0.03 percent to $28.63 on Friday, making those contracts in the money. The investor will be forced to buy the stock for $29 if it remains below $29 for the next three weeks. But including the credit earned, the entry price would be about $28.30. If it closes above $29, the puts will expire worthless and the trader will keep the income already earned.
Selling puts enables the investor to establish a long position in the shares at a modest discount to their market value, sparing them the difficulty of waiting for a lower price. (See our Education section)
The trade pushed total option volume to 5 times greater than average in Friday's session.