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Why One Big Trader is Grabbing Comcast Options

Comcast started rallying this month, and one large investor expects it to keep moving higher through January.

OptionMonster's tracking systems detected the purchase of 10,000 January 17.50 calls for $1.05 and the sale of an equal number of January 16 puts for $0.95. Volume exceeded open interest in the puts but not the calls.

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CNBC/OptionMonster Trading School:

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CMCSA shares rose 1.38 percent to $16.92 in Monday afternoon trading. The cable stock is up 8 percent in the last month and is rebounding after finding support around the $16.60 level.

Today's options trade is designed to leverage small gains in the share price into big profits. It cost a net debit of just $0.10 per call contract purchased, meaning the investor will double his or her money for about every $0.10 that CMCSA climbs above $17.60 by expiration. Given the short position in the puts, it will lose money below $16.

The next potential event that could serve as a catalyst for the shares is the release of third-quarter earnings before the bell on Nov. 4. CMCSA reported better-than-expected earnings and revenue the last time it reported on Aug. 6.

Overall options volume in the name was almost three times greater than average today.

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Comcast Competes With:

Time Warner Cable

Cablevision

Verizon Communications

DirecTV

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David Russell is a reporter and writer for OptionMonster.

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Disclaimer