OCZ Technology appeared to be an up-and-coming tech star until
getting slammed by allegations of fraud this morning.
"OCZ has misrepresented its SSD growth and has financial
irregularities that are nearly impossible to reconcile," a short
seller at Copperfield Research wrote, referring to solid-state
drives. The report also alleged CEO Ryan Petersen has failed to
disclose a criminal background involving charges of theft, drug
violations, and forgery.
Bonnie Mott, OCZ's manager of investor relations, didn't
immediately return a call from
optionMONSTER seeking comment. The author of the Copperfield report
disclosed a short position in the stock but doesn't appear to have
provided further information. Copperfield doesn't have a web site.
The shares had traded up more than 8 percent early in the session
but dropped as soon as the story appeared on Seeking Alpha. They're
now down 24 percent to $7.33 in early afternoon trading. Volume
spiked to 12.6 million shares, 14 times greater than average.
Activity was even more furious in the options, as almost 43,000
contracts trading versus its daily average of 1,828. Traders
aggressively purchased the May 7.50 puts, driving premiums from
$0.20 to $1.80. More than 6,500 contracts changed hands, but volume
was below open interest because investors had recently sold the
same options betting that OCZ would hold its ground.
Investors have also been selling the September 10 calls first for
about $1, but the price edged lower and is now around $0.60.
Another big trade was the December 7.50/10 collar, which entailed
the sale of 3,500 calls at the higher strike and the purchase of an
equal number of puts at the lower strike. That strategy will
simulate a short position in the name.
OCZ rose more than fivefold between August and earlier this month
amid surging demand for its solid-state hard drives. Today's report
by Copperfield alleged that the company is relying on dubious
overseas clients rather than established companies in the United
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.