LYV – Live Nation, Inc. – The producer of live music concerts popped up on our ‘hot by options volume’ market scanner in the first half of the trading session after one bearish trader purchased a large chunk of long-dated put options. Live Nation’s shares are currently down 0.70% to stand at $8.77 as of 12:45 pm (ET). It looks like the put player is expecting shares of the underlying stock to decline significantly ahead of expiration day in January 2011. The options bear honed in on the January 2011 $7.5 strike to purchase roughly 13,700 puts for premium of $1.00 per contract. The trader could be getting long the puts to protect the value of a long position in Live Nation shares. Otherwise, the put buyer may be initiating an outright bearish bet that shares are set to fall in the next 6 months. The investor, should the puts represent an outright bearish bet, makes money if Live Nation’s shares plummet 25.9% from the current price of $8.77 to slip beneath the effective breakeven point to the downside at $6.50 by expiration day. The sharp increase in demand for put options on LYV lifted the stock’s overall reading of options implied volatility 9.4% to 68.89% by 12:55 pm (ET).
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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