Unusual Options Activity: Comcast (CMCSA)

Shares of cable and entertainment giant Comcast (CMCSA) have been trading in a range in recent weeks. One trader sees a return to the high end of that range in the days ahead.

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  • That’s based on the June $59 calls. Expiring in 21 days, over 31,800 contracts traded, a 163-fold increase in volume from the prior open interest of 194 contracts. The buyer of the calls paid about $0.42 to make the trade.

    Shares of Comcast trade near $57, so the shares would need to rise about 5 percent for the trade to move in-the-money at expiration. A price of $59 would also put the company back at its all-time highs.

    Comcast has traded about in line with the S&P 500 over the past year. The long slow death of cable has been somewhat offset by the rise of streaming and other entertainment services, allowing the company to post 55 percent earnings growth in the past year.

    Action to take: Given the rangebound nature of shares in the past few months, a move back to the $59 range is likely. This short-term option has the potential for high double-digit gains or even triple-digit gains that more than double an investor’s original stake. But it will bleed time premium quickly. Traders may like the trade, as long as they’re nimble.

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    Disclosure: The author of this article has no positions in the stock mentioned here, and does not intend to make a trade on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.