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Bears are tuning into Time Warner

David Russell (david.russell@optionmonster.com)

Traders are treading cautiously in Time Warner.

optionMONSTER's Depth Charge monitoring system detected the purchase of more than 2,300 August 62.50 puts, most of which priced for $0.57. Volume was more than 10 times open interest at the strike, indicating that new positions were initiated.

Puts lock in the price where shares can be sold in the media company, which reports earnings before the opening bell this Wednesday. They'll make money in the event of a pullback, letting investors protect long positions before the news or speculate to the downside. (See our Education section)

TWX is trading at $64.54 in morning trading, up 0.39 percent on the day and 35 percent so far this year. The company has been returning capital to shareholders and benefiting from positive sentiment in the media space despite revenue missing estimates the last two quarters.

Total option volume is quadruple the daily average so far today, according to the Depth Charge. Puts outnumber calls by almost 7 to 1.

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