JDS Uniphase has been pulling back, and traders are apparently worried that it might have further to fall.
optionMONSTER's Depth Charge monitoring program showed the purchase of about 10,000 March 14 puts in volume well above previous open interest of 5,860 contracts, indicating new activity. They initially priced for $0.30 and $0.31, but the strong buying quickly drove premiums to $0.35.
The put buyer now has the right to sell shares in the maker of telecom gear for $13 no matter how far they may fall. That could provide significant leverage if the stock continues to drop. (See our Education section)
JDSU is down 0.49 percent to $14.08 in morning trading. The stock gapped higher on Jan. 31 after a strong earnings report but has been retreating since the middle of last month.
The stock is now attempting to hold the same $14 level where it peaked early in the year, which could be leading some chart watchers to fear steeper losses if it breaks lower.
Total option volume is triple the daily average so far today, according to the Depth Charge. Puts outnumber calls by a bearish 10-to-1 ratio.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.