Early this morning we saw a large block trade in LVLT. Paper sold 19,735 Sep 29 Puts to buy 19,735 Sep 24-29 Call Spreads for a total debit of $0.55. This was a huge position, nearly 70 times average daily option volume in this name. The stock was trading at $22.48 when this trade took place, and the stock has already seen a rally. This trade involves selling puts to fund the purchase of the call spreads. The short put component of this trade is extremely risky. With that in mind I want to look at a trade that gets me long the stock without a huge risk component.
Trade:
Buying the LVLT Sep 25-29-33 Call Fly for $0.50
Risk: $50 per 1 lot
Reward: $350 per 1 lot
Breakevens: $25.50 and $32.50