Markets

How traders are hedging Compuware

Traders are hedging their bets in Compuware after more than a year of downside in the stock.

optionMONSTER's Depth Charge monitoring program detected the purchase of 4,000 November 9 puts for $0.65 and the sale of an equal number of February 11 calls for $0.20. Volume was more than 30 times open interest at both strikes, which indicates new positions were implemented.

The transaction cost $0.45 and will provide protection against a drop below $9 through November expiration. It also obligates the investor to sell his or her shares for $11 if they close above that level three months later. See our Education section for other protective strategies.

CPWR rose 0.77 percent to $9.17 in afternoon trading, but has been skidding steadily lower since April 2013. The software company's results have underwhelmed during that time, with revenue consistently missing estimates.

Total option volume is 13 times greater than average so far in the session, according to Depth Charge.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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