Traders apparently think that OmniVision Technologies is ready
to come back to earth after a big pop earlier this year.
optionMONSTER's Depth Charge monitoring system detected the
purchase of 3,000 September 17 puts for $1.425 and the sale of an
equal number of September 14 puts for $0.30. Volume exceeded open
interest at both strikes, indicating that new positions were
initiated at both strikes.
Known as a
bearish put spread
, the trade cost $1.125 and will earn a maximum profit of 167
percent if the stock closes at or below $14 on expiration. That's
roughly the same level where it traded in mid-May before a strong
earnings report drove it higher late in the month.
OVTI is down 2.38 percent to $16.81 in afternoon trading. The
provider of mobile imaging chips has spent almost two years licking
its wounds from a major selloff in 2011. Its last quarterly release
indicated that the tide may be turning for the better, with results
much better than expected. Management also painted an optimistic
outlook as the company gains customers in China.
The date of the next report hasn't yet been announced, but last
year's calendar suggests that it will occur in late August. Today's
downside trade would provide protection through that event, so the
investor may be looking to protect a long position against
potentially bad news. (See our
section for other hedging techniques.)
Total option volume is 6 times greater than average in the name so
far today, according to the Depth Charge. Puts outnumber calls by
24 to 1.
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.
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