Brocade Communications surged last week, and now the bears want
to knock it down a peg.
optionMONSTER's Depth Charge monitoring system detected the
purchase of 2,000 January 9 puts for $0.52 to $0.57. Volume was
almost 14 times open interest at the strike, indicating that new
positions were initiated.
Puts lock in the price where a stock can be sold, so they increase
in value when shares drop. Investors use them to
hedge long positions
or as a substitute for short selling. (See our
BRCD is down 2.7 percent to $8.65 in midday trading but is up 7
percent in the last week. The networking-technology company rallied
after a strong earnings report on Nov. 18 and touched four-year
high two days later, but it now appears to be running out of
Overall option volume in Brocade is twice its daily average so far
in the session, with puts outpacing calls by nearly 2 to 1.
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