DISCA – Discovery Communications, Inc. – The global media and entertainment company popped onto our ‘most active by options volume’ market scanner in morning trading after one investor appears to have closed out a substantial long put position in the July contract. Perhaps the 1.80% increase in the price of DISCA’s shares to $37.75 today inspired the trader to close out the large bearish stance. It looks like the investor originally purchased at least 21,000 puts at the July $35 strike for an average premium of $1.25 apiece back on April 23, 2010, when shares of the stock were trading at a volume-weighted average price of $37.01. Today it seems the options player sold 21,000 puts at the July $35 strike for an approximate premium of $1.07 apiece. We do not at this time know whether the original put transaction was tied to stock. But, the closing out of the put position does hint at a bullish change-of-heart for the responsible party. In isolation, the net loss incurred on the sale of the puts roughly amounts to $0.18 per contract.
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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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