Time Warner Cable appears to be the target of a volatility play as shares trade just off their highs.
TWC is off fractionally at $88.95 in midday trading after touching an all-time intraday highs of $90 on Friday. Shares of the cable provider have been trending higher since the end of November, when they traded just above $57.
The August 85 puts make up almost all of the volume in the name so far today, with 5,000 trading against open interest of 1,990. optoinMONSTER's Depth Charge system shows that blocks of 2,700 and then 2,300 were bought for the ask price of $0.20 about 11 minutes apart.
Less than a minute after each of these option trades, the biggest blocks of TWC stock changed hands. Blocks of 27,000 and then 23,000 went for $88.88.
Since the delta of the options was around 0.1, these stock trades would make the overall position "delta-neutral." This means that the overall trades could profit if shares move sharply higher or lower and/or the actual volatility is greater than that implied by the option prices. (See our Education section)
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