Options Trading News

March 22, 2013  Fri 2:45 AM CT

Dish Network has been rising amid takeover speculation this week, and traders are betting on a floor beneath the stock.

optionMONSTER's tracking systems detected heavy selling in the April 34 puts, which saw nearly 6,800 contracts trade yesterday mostly for $0.35. The volume was more than 3 times higher than the strike's open interest at the beginning of the day, indicating that this is new activity.

These short puts are looking for DISH to stay above the $34 strike price in the next four weeks. If the stock falls below that level, the traders will face the obligation to buy the shares at an effective price of $33.65 once the credit from the put selling is included. (See our Education section)

DISH gained 1.01 percent to $36.85 yesterday while the broader market sold off. The stock had fallen into a tight range between $34 and $35 after hitting resistance at five-year highs near $38 earlier this year, but shares spiked higher on Wednesday with speculation that the satellite-television company would be acquired by rival DirecTV.

Yesterday's trading pushed total option volume in the name past 8,000 contracts, quadruple its daily average for the last month.
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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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