Options Trading News

December 6, 2012  Thu 9:57 AM CT

VMware has been pulling back from a key resistance level, and traders are positioning for the stock to return to recent support.

More than 5,500 December 85 puts traded in a strong buying pattern this morning, led by a single print of 3,224 that went for $0.95, according to optionMONSTER's Depth Charge tracking system. The volume was well above the strike's open interest of 1,869 contracts at the start of the session, indicating new purchases.

The puts were not tied to any stock trading identified by our systems today, though they could have been bought as a protective hedge on a previously established long position. The trader could also be making a straight bearish bet that VMW will fall roughly 6 percent by expiration in about two weeks.

VMW is up 0.87 percent to $91.13 this morning but has fallen in recent days as the stock broke back below its 100-day moving average. The cloud-computing stock had been climbing recently with bullish option activity but last week failed to break through resistance around the $94 level for the second time since gapping lower in early October. Shares have been range-bound between about $84 and $94 in that time.

Overall option volume in the name is already more than 60 percent higher than its daily average. Only 257 calls have traded at all strikes so far, a reflection of the day's bearish sentiment.
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