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Traders stay tuned to News Corp. upside

Chris McKhann (chris.mckhann@optionmonster.com)

News Corp. fell yesterday as the broader market struggled, but some large traders remain optimistic on the media stock.

optionMONSTER's tracking systems detected the sale of 11,000 March 28 calls for $2.30 and the purchase of 11,000 April 28 calls for $2.57. Volume was below the previous open interest in the March options but above it in the April contracts, indicating that the trader is rolling a position foward.

The investor is selling to close the March position and is paying a net $0.27 to stay in the trade for another month. The new long calls , which lock in the purchase price for the stock, will track the share price close because they are in the money and are looking for NSWA to see modest gains by expiration in mid-April.

Later in the afternoon, it was the July calls that were in play. A trader bought 20,000 July 30 calls for $2 against open interest of more than 24,000 and sold 40,000 July 32 calls for $1.

While this could be a roll, it is more likely a call spread done for even money. This means that the trader pays nothing to open the position and gets upside exposure to that $32 level. Above that, however, he or she is effectively short shares in this ratio spread . (See our Education section)

NWSA fell 0.73 percent yesterday to $30.47 but remains near its lifetime high of $30.76 reached last Friday.

Total option volume in the name surpassed 96,000 contracts, compared to a daily average of 16,747 daily average for the last month. Calls outnumbered puts by 25 to 1.

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