Downside play targets Acme Packet
Chris McKhann | firstname.lastname@example.org
APKT is down 7.18 percent this morning, trading at $19.27. The stock is off its low of $19.19 but still at the lowest levels since April 2010. Shares have traded down from above $35 in mid-February and from a 52-week high of $75.17 in early July of last year.
A total of 7,772 APKT options have traded against the daily average of 2,800. Almost all of that volume is in a combination play.
A trader bought 4,100 January 15 puts for $1.35, above the listed ask price at the time, and seconds later sold 2,514 January 22.50 calls for the bid price of $2.20. The open interest at each strike was less than 100.
This combination trade was done for a very small debit, spending $553,500 for the puts and takin in $553,080 for the sale of the calls. It could be an outright bearish play or a type of collar on the stock as protection against a pullback.
The latter would be a very inexpensive way to play the downside but would make money only in the event of a continued steep selloff. It would also have the risk of short shares if APKT climbs above that $22.50 strike price. (See our Education section)