DISH – DISH Network Corp. – The implementation of a ratio put spread on the provider of direct broadcast satellite subscription television services indicates one pessimistic options player is bracing for potential share price erosion ahead of July expiration. The bearish spread was initiated in the first half of the trading session despite the 2.80% increase in the price of the underlying shares to $21.03. It looks like the investor purchased 2,500 puts at the July $20 strike for an average premium of $1.10 apiece, and sold 5,000 puts at the lower July $18 strike for a premium of $0.45 each. The net cost of the transaction amounts to $0.20 per contract. Thus, the ratio put spreader is prepared to make money should DISH shares decline 5.85% from the current price to breach the effective breakeven point on the spread at $19.80 by expiration. Maximum available profits of $1.80 per contract pad the investor’s wallet if DISH Network’s shares slump 14.40% lower to $18.00 ahead of expiration in July.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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