Perfect World is facing nervous trade

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One investor is afraid that Perfect World might drop after a New Year rally.

optionMONSTER's Depth Charge monitoring program detected the purchase of 2,000 June 10 puts for $0.55 and the sale of 2,000 June 14 calls for $0.50. Volume was more than quadruple the previous open interest at each strike.

The trade cost $0.05 and will make money if the Chinese gaming stock pushes lower. It also will turn into a short position above $14, so the investor probably owns the shares and is using the options as a hedge in what's known as a collar . (See our Education section)

PWRD rose 0.74 percent to $12.29 yesterday. It peaked near $50 in late 2009, then proceeded to lose 80 percent of its value over the next two years. The shares spent all of 2012 building support at $10 and began 2013 with a rally.

Total option volume was almost 20 times greater than average in the session, according to the Depth Charge.



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.

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


This article appears in: Investing , Options

Referenced Stocks: PWRD

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