VMware surges but draws bears

By David Russell,

Shutterstock photo

VMware has been exploding higher all year, and now one bear is looking for a reversal lower.

optionMONSTER's Depth Charge tracking system detected the purchase of 1,500 August 70 puts for $2.87, matched against the sale of an equal number of August 60 puts for $0.72. The trade resulted in a net debit of $2.15.

VMW Chart VMW rose 3.84 percent to $74.12 in morning trading. The maker of server-cloning software has rallied 74 percent this year amid strong growth in the data-center and cloud-computing sectors, and it is pushing through the $72 resistance level from May 2008.

Today's trader apparently thinks the shares will struggle to maintain their run and is positioning for a selloff. The put spread will earn a maximum profit of 365 percent if VMW closes at or below $60 on expiration. (See our Education section)

The company crushed forecasts the last time it reported earnings on April 20 and issued bullish guidance for the following quarter, the results of which will be released after the bell on July 20.

VMW is up 18 percent so far this month and today is popping more than 4 percent after a strong report by semiconductor bellwether Intel.

Overall options volume in VMW is more than twice the average level today, with puts accounting for 57 percent of the activity.

(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.

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

This article appears in: Investing Options
Referenced Stocks: VMW

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