Put seller sees Garmin levels holding


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One investor likes Garmin and is using puts to navigate the trade.

optionMONSTER's tracking programs detected the sale of more than 2,000 June 40 puts for $0.54 to $0.56. Volume is more than 14 times previous open interest at the strike.

The investor is now obligated to buy shares for $40 if they close below that level on expiration this Friday. If they remain above it, he or she will keep the credit as profit.

GRMN is down 3.54 percent to $40.29 in morning trading. The global-positioning system company leapt to a four-year high over $50 after a strong earnings report last month but has been drifting lower since then. The shares are now back to their 200-day moving average, which could be leading some chart watchers to think that they will find support.

One potential concern is a report that Apple plans to start competing with the company's turn-by-turn navigation service.  

The current price range is also the same area where GRMN consolidated for more than a week in late December. Another consideration of selling puts is that time decay will accelerate in those contracts with expiration next week. (See our Education section)

Overall option volume in GRMN is almost quadruple the daily average so far in the session.

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

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

This article appears in: Investing , Options

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