Watch for More Upside in CMCSA


Friday, August 11, 2017

Although panic entered the market this week, not every stock ended up in the red. Comcast CMCSA – NASDAQ traded higher every day this week, and according to a trader who just bought 10,000 CMCSA 39.5/41 bull risk reversals expiring September 22, expect the strength to continue.


At $0.68 per spread, the capital outlay totals $680,000 but in reality far more is at risk here. Should CMCSA close between $39.50 and $41.00 at expiration, the full investment will be lost. And if CMCSA drops below the short strike at $39.50 (-3.9%), this trader stands to lose $1 million for every dollar shares fall (on top of the $680k).

In order for this trade to pay off, CMCSA must trade through the break-even price at $41.68, which requires a slight increase of 1.4%. Above this threshold, our customer will make $1 million for every dollar increment higher.

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