Option traders took bearish positions in chip maker Freescale
yesterday morning, and by midday they were already collecting
optionMONSTER's Depth Charge system detected the purchase of 9,300
May 22 puts early in the session for $0.65 to $0.70 in volume far
above previous open interest of just 884 contracts, clearly showing
that new positions were initiated. There was also heavy selling in
the May 24 puts for $1.68 below open interest in that strike, so it
appears that an existing downside position was rolled to a lower
strike and increased in size.
Put lock in the price where a stock can be sold, letting investors
hedge long positions
or speculate on a decline. Either way, those May 22 contracts were
trading at $1.25 to $1.45 as FSL shares fell near their session low
of $21.11, doubling their value in just few hours. (See our
FSL declined 3.36 percent yesterday to $21.55. The semiconductor
company fell below its 50-day moving average on Friday after
reporting first-quarter results the night before.
Overall option volume in the name topped 20,900 contracts
yesterday, with puts making up more than 97 percent of the total.
(A version of this post appeared on
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