Protection in place on Cabot Micro

By David Russell,

Shutterstock photo

Cabot Microelectronics appears to have a bright future, but one investor still wants protection.

The company's chemical slurries are used to polish the layers of silicon on microchips, allowing multiple layers of circuitry. Given the boom in demand, with chips proliferating not just in computers and cell phones, but also in automobiles and industrial devices, it's not hard to see why CCMP is up more than 60 percent since last summer.

optionMONSTER's Depth Charge tracking system detected the purchase of 2,500 July 50 puts for $2.50 yesterday and the sale of an equal number of May 50 puts for $0.60. Volume was below open interest in the May contracts and above open interest in June, indicating that a previously existing position was rolled from one month to the next.

The activity was likely the work of a shareholder who's using the puts as a protective instrument to guard against a drop. It cost him or her an incremental $1.90, and occurred one day before the May puts expire.

CCMP rose 0.48 percent to $49.86 in the session. It peaked at a seven-year high of $52.69 last month and has been consolidating its gains since then.

Overall options volume was 34 times greater than average yesterday, with outs outnumbering calls by 37 to 1.

(Chart courtesy of tradeMONSTER)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing Options
Referenced Stocks: CCMP

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