Cree has been rallying, and one investor doesn't want to see
those profits slip away.
optionMONSTER's Depth Charge monitoring system detected the
purchase of 11,700 June 46 puts for $4.50 and the sale of an equal
number of June 44 puts for $3.46. Volume was below open interest in
the 44s, suggesting that an existing position was closed and rolled
to the higher strike.
The trader is probably using the options as a
on a long position in the maker of light-emitting diodes. He or she
paid $1.04 to make the adjustment and now has the right to sell
shares at $46 instead of $44. (See our
section for more on how options can be used to insure risks in your
CREE fell 1.37 percent to $45.33 yesterday but is up 48 percent in
the last three months. Most of that move followed a
better-than-expected earnings report on Jan. 22, when management
also issued strong guidance thanks to improving demand.
Nonetheless, the shares are now back near a key level where they
gapped lower in March 2011. That could make be leading some traders
to think that they're due for a pullback.
Total option volume was quadruple the daily average in the session,
with puts outnumbering calls by a bearish 11-to-1 ratio.
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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