Viacom (VIAB), short for ‘visual and audio communications,’ is the world’s fourth largest media conglomerate behind The Walt Disney Company (DIS), Time Warner (TWX), and News Corp. (NWS).
A LITTLE BACKGROUND
Headquartered in Manhattan and formed in 2005 as a spinoff from CBS Corporation (CBS), Viacom controls over 170 networks reaching more than 600 million viewers across 160 countries.
Viacom operates Paramount Pictures, BET Networks, MTV Networks, and Nickelodeon. Viacom networks’ history of strong ratings and original content should continue, with Nickelodeon’s popular children’s character Sponge Bob rumored to be the subject of a major Paramount Motion Picture. There is also broad spinoff potential for the recently concluded MTV series Jersey Shore.
RECENT ACTION
Shares of the mass media giant closed at an all-time high of 66.50 this past Friday, prior to yesterday’s sharp pullback of nearly 3.75 percent amid mounting concerns of a Chinese economic slowdown. Shares are currently up 14.3 percent on the year, and trading well above the 50-, 100-, and 200-day moving averages of 56.76, 54.60, and 51.45, respectively.
Several prominent hedge funds have are holding shares of VIAB, including Donald Yacktman’s Yacktman Asset Management and Warren Buffet’s Berkshire Hathaway. Jacob Doft’s Highline Capital Management recently increased their stake in the company by half, bringing it to over one million shares (Source insidermonkey.com)
Monday saw total options volume in the stock at nine times greater than usual, with calls traded outnumbering puts by nearly 27:1.
BIG BOYS
Earlier today, “paper” bought 8586 VIAB May 70 Calls for $.70 which was 6.1 times the
usual volume in options. Paper is an order from a hedge fund, mutual fund, retail bank, or big trader. I jumped on board the VIAB train and bought these calls for $.70
MY TRADE
Buying the VIAB May 70 Calls for $.70
Risk: $70 per 1 lot
Reward: Unlimited
Breakeven: $70.70
