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More downside expected for Sensata

By: optionMONSTER
Posted: 10/3/2011 12:00:00 PM
Referenced Stocks: ST

Sensata Technologies has fallen hard, and one bear is looking for more downside.

optionMONSTER's Depth Charge tracking system detected the purchase of 1,000 November 20 puts for $1.15. An equal number of October 30 puts was sold at the same time for $4.40, but volume was below open interest.

That suggests that an investor made money on the October contracts and now is selling them and rolling down to the November 20s. The strategy let him or her collect $3.25 of income and provided an additional month of downside exposure. (See our Education section)

ST is down 2.04 percent to $25.92 and is sitting at its lowest price since last November. The maker of sensors used in aircraft and motors has been falling hard, falling more than 30 percent in the last three months despite a strong earnings report on July 20.

Overall option volume is 10 times greater than average today, with puts outnumbering calls by more than 100 to 1.