Why Are Traders Betting Against Comcast?
Comcast failed to hold early gains yesterday, prompting one bear to make a large bet against the stock late in the session.
OptionMonster's tracking programsdetected the purchase of about 25,000 July 15 puts for about $1.01 and the sale of about 22,500 July 17 calls for $0.77. Volume was more than four times open interest in each strike.
The cable giant fell 1.96 percent to $15.97 and is down 5 percent in the last month. CMCSA surged to an 11-month high in early December after the company announced a plan to purchase a controlling stake in NBC Universal from General Electric .
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The company reported better-than-expected sales and earnings yesterday morning but fell after saying it was spending more money to add customers.
The option trade, known as a bearish risk reversal, is designed to leverage a move to the downside. It was broken into several parts with multiple canceled transactions, but the trader paid a net debit of about $0.33 for each put contract purchased.
The strategy, which uses income from selling calls to pay for the puts, mimics a short position in the stock and will lose money if Comcast rallies over $17. The transaction pushed overall options volume in the name to more than eight times greater than average.
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Comcast Competes With:
Time Warner Cable
DIRECTV
Dish Network
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Disclosure:
GE is the parent company of CNBC and CNBC.com.
Comcast is the process of a joint venture with General Electric to buy CNBC-parent NBC Universal.
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David Russell is a reporter and writer for OptionMonster.
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