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Why trader is selling News Corp. puts

David Russell (david.russell@optionmonster.com)

News Corp. has been seemingly unstoppable, and one investor is using puts to manage the trade.

optionMONSTER's monitoring programs detected the sale of more than 4,200 October 25 puts for $0.60. Volume was more than 380 times open interest at the strike, indicating that a new position was implemented.

The investor is now obligated to buy shares of the media company for $25 if they're below that level on expiration. But including the credit earned, the purchase price would be $24.40.

NWSA rose 1.65 percent to $24.88 yesterday. The stock is up 23 percent in the last three months, following other media names higher. It's also benefited from a plan to separate its publishing and video businesses.

Selling puts lets the investor program an entry below current price without having to wait for a pullback. If the stock keeps running and closes above $30, the puts will expire worthless and the seller will keep the $0.60 credit. (See our Education section)

Overall option volume was triple the daily average in the session.

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