Power One peaked around $13 four months ago, and one trader
apparently still thinks that's the top.
optionMONSTER's monitoring systems detected the sale roughly 5,900
April 13 calls for $0.65 and $0.70 against open interest of just
1,371 contracts. The trade pushed total option volume in the
green-energy company to about twice the daily average.
PWER fell 2.19 percent to $10.68 yesterday and has been drifting
lower since hitting $13.04 in August--its highest price since
January 2004. The decision to sell calls with that strike price
indicates that the trader thinks that the same level will continue
to act as resistance.
This investor may own the stock and is selling the contracts as
part of a covered call strategy. Or this could be a straightforward
bet speculating that the shares won't appreciate much further. (See
our Education section)
Sellers have been pummeling the stock, knocking it lower after good
earnings reports on Aug. 29 and Oct. 28. Short interest stood at a
hefty 46 percent of the float at the end of last month, and its
valuations remain inexpensive, with a forward price-to-earnings
ratio below 9 times.
The stock may also be breaking free of its recent downtrend as it
seems to be finding support above its 50-day moving average (black
line on chart), action that some traders may consider bullish.
Nonetheless, yesterday's option action reflected the opposite
(Chart courtesy of tradeMONSTER)
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