Options Trading News

November 1, 2012  Thu 9:47 AM CT

Shares of Coinstar are popping at a key technical level, and one trader is betting on a floor beneath the stock.

A single print of 2,000 December 45 puts was sold for $1.95, according to optionMONSTER's tracking systems. The volume was well above open interest of 366 contracts at the beginning of the day, so this is clearly a new position.

CSTR is up 1.68 percent to $47.76 this morning, breaking above its 50-day moving average for the first time since mid-July. The company, which operates the Redbox DVD-rental kiosks, missed forecasts in its quarterly report on Oct. 25 but announced a distribution deal with Warner Bros. at the same time.

Today's put seller is looking for CSTR to be above the $45 strike price by expiration in December. If it is below that level, the trader faces the prospect of buying shares at an effective price of $43.05 once the credit from the put sale is factored in. (See our Education section)
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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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