The following post is a Guest Blog by CNBC Contributor Brian Stutland.
Pandora saw heavy option trading volume on Monday after announcing December 2012 listener metrics.
The data came in better than expected, with total listener hours up 54 percent year-over-year. As a total share of radio listening in December 2012, Pandora accounted for 7.19 percent, versus 4.71 percent in December 2011, and active listeners increased 41 percent year-over-year. The stock finished 0.50 percent higher on the news despite modest broad market weakness.
On top of this, Pandora is now integrated into more than 1,000 products, many of which are being displayed in Las Vegas at the Consumer Electronics Show right now. The bullish outlook has one option trader positioning himself to take advantage of the potential upside in the stock by selling 7,500 March 8-strike puts for $0.35 each. (Read More: Mobile Wars: Pandora's Got Frenemies.)
This trade will profit if Pandora remains above $8 through March expiration. If Pandora is below $8, the trader will be "put" the stock—in other words, be forced to buy it—at that price, even if the stock is well below that level.
Therefore, by selling the put, the trader is saying that the stock is a good buy at that level. Having already made that decision, this trader is creating yield (17 percent annualized) while waiting to see if the stock dips down to $8.