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• Earnings, IPO ignite Dean Foods rally
• Futures, Europe pull back from rallies
• Bulls go on shopping spree at Macy's

• ONNN 100% Rate It

ON Semiconductor is down to long-term support, and one investor apparently believes that shares will fall no further.

optionMONSTER's tracking systems detected the sale of 2,500 October 6 puts for $0.30 and the purchase of an equal number of October 4 puts for $0.10. There was barely any open interest at either strike before the trade appeared.

ONNN is down 6.29 percent to $6.41 in morning trading after the company reported weak second-quarter results and guided the third quarter below expectations. Shares in the chip maker, however, are near a level where they bounced in mid-2010, which could be leading some chart watchers to think that there is little risk of further declines.

Today's trader collected a credit of $0.20 and will be on the hook to buy ONNN shares for $6 if they close below that level on expiration. Owning downside puts at the October 4 strike provides insurance against a complete collapse. (See the discussion of credit spreads in our Education section.)

Overall option volume in ONNN is 23 times greater than average so far in the session.

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