Bears showing no mercy for Finisar

By David Russell,

Shutterstock photo

Finisar has been a punching bag for the bears, and now they're taking out the brass knuckles.

The maker of telecom-networking gear traded over $40 in early March, only to crater after management warned of inventory gluts. Earlier this week it bucked that downtrend and attempted to push back above its 50-day moving average but ran into a wave of selling pressure before closing down 9.64 percent at $18.46.

In Finisar's largest option trade yesterday, an investor purchased about 6,000 August 18 puts for $0.64 and sold an equal number of August 16 puts for $0.16, according to our Depth Charge tracking system. This bearish put spread cost about $0.48 and will earn a maximum profit of 317 percent if FNSR closes at or below $16 on expiration. (See our Education section)

The company reported more bad numbers on June 15, when revenue and guidance were worse than expected.

Overall option volume in the name was 8 times greater than average yesterday, with puts outnumbering calls by 8 to 1.

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

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

This article appears in: Investing Options
Referenced Stocks: FNSR

More from optionMONSTER




Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by