MOT – Motorola Inc. – It took three months for shares in the cellphone-maker to recover from a slide to almost $6.00 back up to $7.75. And of course the next quarter was spent undoing the gains yielding a near-perfect channel for traders to mark their entries. Today shares once again hit the top of the range after a three-day killing streak propelled them almost 15% higher. A bearish strategy seems to be coincident with today’s movement and involves the curious trade-in of deeply in-the-money puts at the $12.50 strike January 2012 expiration in exchange for sold calls at the same expiration $7.50 strike. The near 5,000 calls traded at an average price of $1.48 while the puts traded at $5.25. This trade is curious today to see the least and one explanation is that the recent revival of Motorola’s fortunes may have been enough to inspire an exit from this bearish position, which initially would have been long calls and short puts.
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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