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Put seller sees Level 3 holding up

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Shares of Level 3 Communications has been on a roller-coast ride in the last month, but one trader apparently believes that further downside will be limited in coming months.

optionMONSTER's tracking systems detected the sale of 2,500 July 20 puts for $0.58. This is clearly a new position, as the volume is more than 14 times higher than the strike's open interest before the trade appeared.

The put seller is betting that LVLT will hold above the $20 strike price through expiration in mid-July. If it falls below that level, the trader will be on the hook to buy shares at an effective price of $19.42 once the $0.58 credit from the put sale is included. (See our Education section)

LVLT is down 1.26 percent to $21.16 this morning. The broadband-communications company had shot above $24 earlier this month after bouncing off support around $19.50, but the stock has given up most of those gains since.

Total option volume in the name is already more than triple its daily average for the last month. 

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