I’m on vacation this week and won’t be in front of my screens for the most part. CC and I will continue to post but some days may be slightly lighter on content.
Here is some long premium directional untied options activity that caught my eye today in the media space:
CMCSA: Comcast has outperformed the broad market so far in 2016, up nearly 7% on the year and up about 15% from its February low. Today when the stock was $59.93 it appears that a long holder rolled an overwrite up and out, buying to close 8,000 April 1st weekly 60 calls for 54 cents and selling to open 8,000 May 6th weekly 62.5 calls at 59 cents, collecting 5 cents for the roll. The investor will now have profits up until $62.55 through May 6th, which will catch the company’s next scheduled earnings event on April 27th.
Overwriting long stock in a sideways or downward trending market can be a smart yield enhancement strategy. Looking at the one year chart of CMCSA you can see that since making a 52 week high in July of last year the stock has made a series of lower highs despite what appears to be a double bottom in Aug/Sept and Jan/Feb:
DIS: sticking with the overwriting theme, and in the entertainment space, there appeared to be an opening seller of out of the money calls in Disney. When the stock was $97.80, a trader sold to open 10,000 of the June 105 calls at about $1.02. This is likely an overwrite of 1 million shares of DIS. If the stock is below $105 on June expiration then the investor would take in $1.2 million in premium. The investor would have gains of the stock until $105, and could be called away if it is $105 or higher, but effectively selling the stock at $106.02, (the strike price plus the premium received).
While CMCSA has shown relative outperformance ytd, DIS is down nearly 7% on the year, but up about 13% from its February low, basically in line with the gains of the S&P 500 off of the recent lows. Taking a quick look at the on year chart of DIS, despite the recent consolidation between $9 and $100, the stock remains in a massive downtrend with an epic double top from 2015 that formed a lower lows and two lower highs:
TWX: Time Warner is up nearly 4% on the blowout results of Batman vs Superman over the weekend, bringing in $166 million in North America. The stock’s bounce looks like it caused an investor to close a bearish bet or a possibly a hedge of 1 million shares. When the stock was $72.40 a trader sold to close 10,000 April 80 puts at $7.75. It appears these puts were bought to open on March 16th for $8.76 when the stock was $71.28.
TWX has massively outperformed the S&P 500 and many of its peers from its lows in February, up more than 25%. and up 12% on the year. The stock is approaching its 200 day moving average for the first time since early August: