Bears see Garmin in wrong direction

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Garmin has been unable to lift itself from a long-term funk, and now the bears are looking for the stock to break down.

GRMN optionMONSTER's Depth Charge detected the purchase of about 3,200 February 31 puts for $1.64 and the sale of an equal number of February 27 puts for $0.41. That leaves a cost of $1.23 for this put spread, with the potential to earn about 225 percent if GRMN falls to $27 on expiration. (See our Education section)

GRMN closed yesterday at $31.25, down 0.45 percent on the day. Short interest has been building in the stock, which remains trapped below its 200-day moving average (purple line on chart).

In a disappointing earnings report on Nov. 3, the maker of satellite tracking devices issued a weak forecast as it continued to struggle in the smartphone market.

Overall option volume in GRMN yesterday was more than 9 times the average, with puts outnumbering calls by 11 to 1. 

(A version of this post appeared on InsideOptions yesterday. Chart courtesy of tradeMONSTER.)



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: GRMN

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