At least one big investor apparently wants protection on SAP
with the German software giant parked at long-term highs.
optionMONSTER's Depth Charge tracking program detected the purchase
of more than 3,000 March 80 puts against open interest of 2,179
contracts. Premiums rose from $2.10 to $2.20, with most of the
volume pricing at the higher end of that range.
Puts lock in the price where investors can sell shares, so they
will appreciate if SAP drops in the next eight weeks. Investors
often use the contracts as a
hedge on a long position
in the stock, insuring them against a pullback without forcing them
to sell prematurely. (See our
section for more on how options can be used to manage risk.)
SAP is up 3.06 percent to $80.90 in afternoon trading and is up
more than 30 percent in the last six months. The stock is now
hovering around its highest levels since the 2000 tech bubble,
which could be leading some traders to fear that it's at risk of a
Total option volume in the name is quadruple its daily average,
with puts dominating the activity.
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.