Someone thinks the rally is over for News Corp.
optionMONSTER's Depth Charge monitoring system detected the purchase of 3,000 October 27 puts for $0.50 and the sale of an equal number of October 32 calls for $2.50. Volume was more than twice the open interest at each strike, indicating that new positions were implemented.
The investor probably owns shares in NWSA and is using the options to hedge against a drop. He or she collected a credit of $2 and now has the right to sell the stock for $27. The trader has also agreed to unload them for $32 if they close above that level on expiration.
Including the credit, the investor now has a minimum selling price of $29 and a maximum of $34. (See our Education section for more on how options can be used to manage risk.)
NWSA is up 0.4 percent to $33 this morning and 70 percent in the last year. The media giant has been sitting near all-time highs since gapping higher after its last quarterly report on May 9.
Today's downside collar trade accounts for almost all of NWSA's option volume in the session so far, according to the Depth Charge.
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