Fortinet reports earnings this afternoon, and investors are
optionMONSTER's Depth Charge tracking system detected the purchase
of about 1,000 May 26 puts for $1.80. Roughly the same number of
May 23 puts were sold at the same time for $0.61. Volume was above
open interest in both strikes.
The trade cost about $1.19 and will earn a profit of approximately
150 percent if the network-security stock is at or below $23 on
expiration. The strategy is known as a bearish put spread because
it leverages a move between two specific prices. (See our
FTNT is down 1.74 percent to $25.96 in midday trading. It rallied
about 40 percent in the first quarter but then stalled around $28
and has been drifting lower since.
The company has beaten expectations for at least three straight
quarters. This session's activity is probably the work of investors
wanting to hedge before today's report.
Some 1,800 May 25 puts were also bought for $1.35 to $1.45. The
trade occurred at about the same time the put spread crossed Depth
Overall option volume is 5 times greater than average so far today,
with puts outnumbering calls by almost 2 to 1.
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.
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