One investor is using an unusual strategy to get long Vodafone as the stock tries to rouse from a long slumber.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 7,238 April 29 calls for $0.34 and the sale of an equal number of March 27 puts for $0.31 on Friday. That translated into a cost of $0.03.
The resulting position is similar to owning shares in the global telecom giant. The unusual thing about the strategy is that the trader bought later-dated long calls than the puts sold . The resulting position has two months to benefit from a rally but only one month to lose money from a drop.
The trader would be forced to buy shares if VOD falls below $25 but may be willing to do that anyway if he or she likes the stock. (See our Education section for more on how options can be used to manage trades.)
VOD rose 1.51 percent to $27.51 on Friday and is up 9 percent so far this year. It was the target of repeated call buying last month, handing some investors profits of more than 100 percent in a few short sessions. The shares then hit resistance at their 200-day moving average and have been consolidating since.
Total option volume was nearly double the daily average in VOD on Friday.
More From optionMONSTER