Liberty Global: How a High-Conviction Idea Became a 165% Options Win

Liberty Global: How a High-Conviction Idea Became a 165% Options Win

Every so often, a trade comes along that perfectly illustrates why we pair special-situations research with smart options structuring. Liberty Global (LBTYA) was one of those trades.

The underlying stock performed well (I still own it!), but the more interesting story is how options turned a solid idea into an exceptional outcome.

This case study walks through what happened, why it worked, and what we learned.

The Original Thesis

In June 2024, I recommended Liberty Global. Here’s the core pitch:

“John Malone is one of the best capital allocators of all time and has demonstrated an incredible track record of creating shareholder value. But his strategy of late (creating a highly levered telecom conglomerate and buying back stock) has not worked. He and the rest of the Liberty Global management team have recognized this and changed their course. They have made the decision to ‘de-conglomeratize.’ In other words, Liberty Global is going to focus on spinning off assets to force the market to recognize the massive disconnect between Liberty’s assets and current equity capitalization. I see 50% to 150% upside over the next couple of years. The spin-off of Sunrise, Liberty’s Swiss telecom company, will be the first major catalyst to unlock shareholder value.”

The stock recommendation has held up well — shares are up roughly 26% since publication, including the Sunrise spin-off.

But using options to express the idea turned that respectable return into something far better.

Building the Trade: A Synthetic Long

At the time of the recommendation, Bruce Harper, Head of Ultra Options Advisory, viewed LBTYA as a perfect candidate for a synthetic long — a structure that:

• Buys a call and
• Sells a put
• Same strike. Same expiration.

This combination replicates the economics of owning the stock outright, typically with far less upfront capital.

Our structure was:

• Long LBTYA $17.50 January 2026 call
• Short LBTYA $17.50 January 2026 put

Net cost: $209 per contract

Bruce laid out the logic and periodically recommended selling additional calls when the stock strengthened — a key driver of the eventual result.

How the Trade Performed

At today’s price, our January 2026 call has $3.59 of intrinsic value, while our short put is on pace to expire worthless unless LBTYA declines 33% by expiration.

On the synthetic long alone, our return is:

• Cost: $209
• Value of long call: $359
• Short put: expires worthless

Return: +72%

A strong result on its own.

But the trade got even better.

Supercharging Returns: Selling Out-of-the-Money Calls

For the past year and a half, Bruce took advantage of strength in LBTYA by recommending the sale of out-of-the-money calls. The premiums added up, and even when we had to roll positions to keep pace with the stock’s move, the calls ultimately expired worthless.

Total additional income generated: $194 per contract.

Adding that to the +72% from the synthetic long pushes the total return to: +165%

Here’s the simple breakdown:

This is the power of pairing a high-conviction thesis with the right structure.

Lessons Learned

1. Options can meaningfully amplify special-situations investing.
When the underlying thesis is strong but timing is uncertain, a synthetic long allows you to stay exposed while committing less capital.

2. The original de-demerger arbitrage thesis is still intact.
My base case called for 50%–150% upside as Liberty Global unlocks value through structured spin-offs. RemainCo still has meaningful appreciation potential — which wasn’t even required for this trade to work exceptionally well.

3. Spin-offs can disrupt option chains.
Before the Sunrise spin-off, we could reliably sell out-of-the-money calls to generate extra income. After the spin-off, the option chain became irregular, liquidity thinned, and those opportunities dried up. A helpful lesson for structuring similar trades in the future.

Interested in Similar Options Ideas?

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