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What put action means for CommVault

By: optionMONSTER
Posted: 10/25/2011 11:16:00 AM
Referenced Stocks: CVLT

CommVault Systems has been climbing for two months, and one investor apparently thinks that it may pull back.

optionMONSTER's Depth Charge tracking system detected the purchase of about 2,000 November 43 puts for $3 and the sale of an equal number of November 40 puts for $1.50. Volume was above open interest in the higher strike, but about the same as open interest in the lower strike.

That points to two possible explanations. One is that an existing protective trade was rolled higher by $3 as a shareholder sought a tighter hedge on their position in the stock. The second is that both the 40s and 43s were opened, in which case it was a bearish put spread designed to leverage a drop to $40.

Regardless, both explanations cost $1.50 and reflect a desire to guard against a move lower. (See our Education section)

CVLT is down 0.98 percent to $42.33 in morning trading and is up more than 30 percent since late August. The provider of data-management products has enjoyed strong demand as corporate spending improves.

CommVault beat forecasts on the top and bottom lines the last time results came out on Aug. 2. The next earnings report is scheduled for the morning of Nov. 1.

Overall option volume is 6 times greater than average in the stock so far today, with puts outnumbering calls by 47 to 1, according to the Depth Charge.