Verizon Communications is near a long-term high, and one bear is looking for a drop.
optionMONSTER's Depth Charge monitoring program detected the purchase of about 9,800 January 2013 37 puts for $4.04 and the sale of an equal number of January 2013 20 puts for $0.43, resulting in a cost of $3.61. Volume was above the open interest in both strikes.
This bearish put spread will leverage a long-term decline in the telecom company's stock. A maximum profit of 371 percent will be realized if VZ closes at or below $20 on expiration, which is 13 months from now. It could have been an outright bearish bet or the work of an investor looking to hedge a long position in the shares. (See our Education section)
VZ rose 0.53 percent to $38.05 yesterday and is near its 52-week high of $38.95. That was also roughly the same level where it bounced in November 2007 before crashing along with the rest of the market, which could be leading some chart watchers to expect that it will present long-term resistance.
The bearish trade pushed total option volume in the name to almost triple its daily average yesterday, with puts accounting for more than two-thirds of the activity, according to the Depth Charge.
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