Universal Display has been languishing, and the bears are sharpening their claws.
optionMONSTER's Depth Charge monitoring program detected two large downside trades in the fast-growing maker of low-energy light-emitting diodes. It started in the purchase of 1,000 March 35 puts for $4.10 and the sale of 1,000 March 45 calls for $3.60, resulting in a net cost of $0.50.
Similar activity occurred a few minutes later in the January 45 calls and the January 35 puts, with 1,000 contracts in each. The debit was about $0.50 in that transaction as well.
Both positions will make money from a drop in PANL. They were probably the work of an investor who owns shares and is willing to sell them if the stock goes back to $45. The strategy is known as a collar , one of the most common hedging methods in the market
PANL is down 1.82 percent to $38.29 today and has lost more than a quarter of its value in the last month. Despite reporting consistently strong earnings and winning contracts for the use of its technology, the stock trades at extremely high multiples and seems to be getting affected by bearishness in other LED companies such as Cree.
The shares have also spent more than two weeks consolidating below their 100- and 200-day moving averages, which some chart watchers may consider a bearish indicator.
Overall option volume is twice the average amount so far today, with those collars accounting for almost all the activity, according to the Depth Charge.
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