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July 12, 2012  Thu 3:14 AM CT

PBI: SEE CHART GET CHAIN FIND STRATEGIES
Pitney Bowes is hovering near a 20-year low, and the bears are looking for even more downside.

optionMONSTER's Depth Charge tracking program detected the purchase of 10,000 August 13 puts for $0.475 and the sale of 5,000 July 16 puts for $1.70. Volume was below open interest in the July contracts, indicating that an existing position was closed and rolled to the lower strike.

The activity is especially noteworthy because the investor doubled the number of contracts in rolling the position forward, increasing leverage in the event of a significant drop. He or she may be looking for PBI to fall after the next earnings report on Aug. 2.

PBI rose 0.56 percent to $14.33 yesterday. It has lost 36 percent of its value in the last year and in May hit its lowest level since 1991.

The company has struggled against weak demand for its postage-stamping machines, which have slowly lost relevance along with physical mail. Revenue has missed estimates for several quarters, and other business lines have yet to reverse the longer-term trend.

Bears have been piling into the name, pushing short interest to more than 30 percent of the float. Some investors may expect the company's financial problems to worsen as low interest rates increase its pension liabilities.

Overall option volume was 7 times greater than average in the session, with puts outnumbering calls by more than 70 to 1.
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