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Lions Gate Entertainment Corp. Message Board

  • wanna_million wanna_million Apr 24, 2013 2:31 PM Flag

    Options activity

    Outlaw, I found this about options activity. I don't know if this movement is a ploy for Hedgies to make money...maybe MHR is attacking the bears and protecting his investment in LGF by buying even more? Don't know, but there sure seems to be a battle going on. Or...........big news in the works.

    The bears are trying to attack Lions Gate Entertainment with the shares near all-time highs.

    optionMONSTER's Depth Charge monitoring program detected the purchase of some 17,000 June 23 puts for $1.04 to $1.20 in volume that dwarfed the strike's previous open interest of just 518 contracts. Premiums increased as the stock rose, illustrating a strong buying pattern.

    Puts normally move in the opposite direction as the shares because they're essentially insurance policies against lower prices. Traders buy them to hedge a move to the downside or to speculate on a drop. They can be safer than simple short selling because there is no upside risk. (See our Education section for more)

    LGF is up 1.31 percent to $24.02 in late-morning trading and has broken out to new all-time highs. The studio's shares rallied some 50 percent in the first quarter and have been consolidating since. Its last two earnings reports have beaten expectations.

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    • Hmmmm...is this possible? The traders wanted to make a huge purchase to get in LGF but they did not want to attract the attention of daytraders to drive up price, so they open up the put contracts to get all the daytraders set for a price movement down. As daytraders either stay away or start shorting, the people "in the know" accumulate without driving the price up ridiculously. It is all about the psychology in investing......I wonder if this is so.

    • Here's more detail from Schaeffer's research
      Lions Gate Entertainment Corp. (USA) (NYSE:LGF) climbed to a new record high of $24.19 earlier today, after scoring a price-target hike to $28 from $23 at Wunderlich Securities in pre-market action. However, the upbeat attention hasn't swayed bearish bettors from zeroing in on the stock, as roughly 30,000 puts have crossed the tape so far -- an impressive 42 times the equity's anticipated intraday put volume. By contrast, just over 1,900 calls have changed hands. It appears that a large number of today's traders are expecting the stock to falter by summer -- a timeframe that may encompass the firm's next quarterly earnings report.

      Leading the pack by a landslide is the June 23 put, where more than 26,500 contracts have traded at a volume-weighted average price (VWAP) of $1.14. The majority of these puts were exchanged at the ask price, suggesting they were bought. Since today's volume has greatly exceeded open interest at this strike -- and implied volatility has increased by 5.3 percentage points during the course of the session -- it's likely that new positions are being added here. By purchasing these puts to open, speculators are counting on LGF to retreat below $21.86 (strike price less the VWAP) by June expiration. This represents a drop of 8.2% from the stock's present price of $23.80.

      Today's campaign for puts over calls is in keeping with Lions Gate Entertainment Corp.'s recent options trend. In fact, the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.98 is just 3 percentage points shy of a 12-month peak. Or, in simpler terms, traders have been snapping up bearish options over bullish at a near annual-high clip.
      LGF has been a technical standout lately, boasting a year-to-date gain of more than 45%, and almost doubling in value during the last 12 months. The shares have also bested the broader S&P 500 Index (

 
LGF
33.92+0.47(+1.41%)Sep 19 4:01 PMEDT

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