NII Holdings tried to mount a significant rally yesterday, but
the bears had other ideas.
The emerging-market telecom was up almost 4 percent at one point in
the session, but then optionMONSTER's Depth Charge monitoring
program lit up with activity in the June 6 puts. Some 1,500
contracts were bought, mostly for $1.05 and $1.10, in volume that
was well above the strike's previous open interest of just 181
NIHD fell immediately yesterday morning and ended the session up
1.54 percent at $5.92. The stock has been trending steadily lower
since mid-2007, losing about three-quarters of its value in the
last year alone.
Weighed down by heavy debt and consistently weak earnings, NIHD has
been a favorite among the bears. Short interest accounts for about
40 percent of the float.
Yesterday's put buyers now have the right to sell NIHD for $6 in
the next four months regardless of how far it declines. That
provides leverage to the downside.
The contracts may have been purchased by an investor looking to
hedge a long position
in the name. Alternatively, the trade could be the work of a
speculative bear who doesn't want to face the risk of a potential
short squeeze by selling the stock. (See our
section for more on how options can be used to manage risk.)
More than 2,400 contracts traded in the session, according to the
Depth Charge. Puts outnumbered calls by a bearish 8-to-1 ratio.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.