What's behind Virgin Media call sales

optionMONSTER

Call selling topped yesterday's option activity in Virgin Media as the stock climbed to new highs.

More than 11,000 VMED options traded on the day, compared with a daily average of 1,700 in the last month. Fewer than 300 of those contracts were puts, and virtually all of the action was in the February 40 calls.

optionMONSTER systems show that a block of 8,850 of the calls sold for the bid price of $0.75. The volume was well above the strike's open interest of 1,146 contracts before the session began, so this is clearly a new position.

The options were likely sold against a long position in the stock, creating a covered call position. That would be bullish up to the $40 strike price but would surrender any gains above it. (See our Education section)

VMED finished the day up fractionally at $39.13 but off the session high of $39.63. The U.K. broadband carrier's stock has almost doubled since its May low.

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