Options Trading News

May 15, 2013  Wed 11:01 AM CT

Live Nation Entertainment has been explosive, but some traders think that what goes up must come down.

optionMONSTER's Depth Charge monitoring program detected the purchase of some 10,000 June 13 puts for $0.35 to $0.45. Volume was more than 200 times open interest at the strike.

Puts lock in the price where shares can be sold in the music-venue owner, whose properties include House of Blues and The Fillmore. Their cheap cost can cause them to rack up some quick gains in the event of a pullback. They're often used to insure long positions, offsetting losses in key holdings. (See our Education section for more on how options can help you maintain a balanced portfolio.)

LYV is off 0.43 percent to $13.97 in midday trading. It peaked around $13 last month, so today's traders may be looking to insure against a drop below that potential support level. The shares are near their highest level in three years, up 50 percent from the start of January.

Total option volume is 36 times greater than average so far today, with puts outnumbering calls by 236 to 1.
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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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