GCI – Gannet Co., Inc. – The international news and information company, which publishes newspapers such as USA Today and operates a number of U.S. television stations, popped up on our scanners after large prints were detected in the October contract. It looks like one big options strategist expecting Gannet’s shares to rally enacted a bullish risk reversal on the stock. Gannet’s shares increased as much as 5.6% during the first half of the trading day to touch an intraday high of $13.47. The rally in the price of the underlying stock attracted the attention of plain-vanilla call buyers, as well. The bullish trader appears to have sold 11,000 puts at the October $10 strike at a premium of $0.10 each in order to buy the same number of calls at the October $16 strike for premium of $0.10 apiece. The investor essentially initiated a free trade and stands ready to accrue profits should Gannet’s shares surge 18.8% over today’s high of $13.47 to exceed $16.00 by October expiration day. The sale of the put options suggests the investor is willing to have 1,100,000 shares of the underlying stock put to him at $10.00 each in the event that shares plunge 25.75% lower and the puts land in-the-money at expiration. Other optimists purchased approximately 3,300 calls at the October $14 strike for an average premium of $0.70 each. These traders make money if GCI shares increase 9.1% to exceed the average breakeven price of $14.70 by expiration in October. Finally, bulls also picked up some 4,800 calls at the October $15 strike at an average premium of $0.33 a-pop. Call buyers at this strike profit if, by expiration, shares of the underlying stock jump 13.8% to surpass the breakeven price of $15.33. Options implied volatility on the stock is higher by 4% to stand at 53.14% as of 12:10 pm ET.
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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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