OptionsHouse

Options Trading News

December 13, 2013  Fri 11:40 AM CT

DISH: SEE CHART GET CHAIN FIND STRATEGIES
A large trader apparently believes Dish Network will hold current levels through the winter.
 
optionMONSTER systems show that a trader bought 4,000 January 49 puts for the ask price of $0.90, below the previous open interest of 5,157 contracts. Seconds later, he or she sold 4,000 March 50 puts for the bid price of $2.65 in volume that was 10 times the open interest at that strike, clearly indicating that it is a new position.

This could be a short diagonal spread, selling the later-dated contracts to take advantage of their higher premiums. But it is far more likely that the trader is rolling a short-put position to a lower strike and forward by two months to get more time for the strategy to work. (See our Education section)

In the latter case, the trader is buying back the January puts to close that position and is left with the short puts in March. That would be a bet that DISH holds above $50 through expiration in three months, but the trader will be on the hook to buy shares if they fall below that level.

DISH is up 1.26 percent to $53.70 in early afternoon trading after bouncing right off support at its 20-day moving average. The satellite-television company hit $55.37 on Monday, its highest price since May 2000, though shares were below $50 in mid-November.
Share this article with your friends


Related Stories

DISH

Large investor keeps rolling with Dish

August 25, 2016

The satellite-television operator is up 7 percent in the last three months, and one large trader is looking for a rally by the end of the year.

OptionsHouse

Premium Services

Education & Strategy

Dissecting a big institutional trade

This week's column will study a recent call ratio spread. We're not recommending using this strategy because it has potentially huge risk. But we can learn from this different use of options by a large institutional investor.

View more education articles »