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Two ways to profit from Time Warner

David Russell (david.russell@optionmonster.com)

One investor likes Time Warner Cable and doesn't want to wait for a pullback to get long.

optionMONSTER's market scanners detected the sale of 5,750 January 90 puts for $0.90 and $0.95. Volume was more than 15 times previous open interest at the strike.

There are two ways he or she can make money from the trade. One is that the cable operator's stock remains above $90, in which case the puts will expire worthless and the trader will keep the credit already earned as profit.

Alternatively, if shares pull back to $90, they now have a buy order in place. That level was resistance for most of August, which could make some chart watchers expect it to become support and therefore a good place to get long. The only way the trader will lose money is if the stock breaks significantly below $90.

TWC is up 0.27 percent to $99 today and up 56 percent this year. Earnings come out before the bell on Monday. If the results are uneventful or positive, it will also help reduce the value of the puts sold short . (See our Education section for more ideas on how to trade news events using calls and puts.)

Total option volume is 5 times greater than average so far today.

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