Power One peaked around $13 four months ago, and one trader apparently still thinks that's the top.
optionMONSTER's monitoring systems detected the sale roughly 5,900 April 13 calls for $0.65 and $0.70 against open interest of just 1,371 contracts. The trade pushed total option volume in the green-energy company to about twice the daily average.
PWER fell 2.19 percent to $10.68 yesterday and has been drifting lower since hitting $13.04 in August--its highest price since January 2004. The decision to sell calls with that strike price indicates that the trader thinks that the same level will continue to act as resistance.
This investor may own the stock and is selling the contracts as part of a covered call strategy. Or this could be a straightforward bet speculating that the shares won't appreciate much further. (See our Education section)
Sellers have been pummeling the stock, knocking it lower after good earnings reports on Aug. 29 and Oct. 28. Short interest stood at a hefty 46 percent of the float at the end of last month, and its valuations remain inexpensive, with a forward price-to-earnings ratio below 9 times.
The stock may also be breaking free of its recent downtrend as it seems to be finding support above its 50-day moving average (black line on chart), action that some traders may consider bullish.
Nonetheless, yesterday's option action reflected the opposite sentiment.
(Chart courtesy of tradeMONSTER)
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