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June 19, 2012  Tue 9:30 AM CT

SWKS: SEE CHART GET CHAIN FIND STRATEGIES
The bears want to pounce on Skyworks Solutions as the chip maker struggles with a resistance level from earlier in the year.

optionMONSTER's Depth Charge monitoring system detected the purchase of about 2,500 August 29 puts for $2.85. Volume is more than 7 times open interest in the strike.

SWKS is up 0.71 percent to $28.46, back around the same price area where it peaked in March. Today's put buyer apparently thinks that sellers will come forward at this level once again and drive the stock lower.

The trader is using in-the-money contracts, which will closely track declines in the share price. They're more expensive than out-of-the money options and reflect a stronger bearish conviction. (See our Education section)

The company's results have beaten expectations for at least the last four quarters. The date of the next report for its fiscal third quarter hasn't been announced, but last year it was on July 21.

Overall option volume in SWKS is almost twice the average amount so far today, with puts outnumbering calls by more than 3 to 1.
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As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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