Options Trading News

June 13, 2013  Thu 3:47 AM CT

Fusion-IO has been on a wild ride in recent months, but one trader is betting that any downside will be limited through early next year.

optionMONSTER systems detected the sale of 5,150 January 12 puts for the bid price of $1.55 yesterday. The volume was 10 times the strike's previous open interest, so this is clearly a new position.

The put seller is betting that FIO will remain above $12 before the options expire in mid-January. If the stock falls below that level, the trader will face the obligation to buy shares at an effective price of $10.45 once the credit from the put sale is included. (See our Education section)

FIO fell 3.32 percent to close at $13.98 yesterday. The data-storage maker gapped higher on strong quarterly numbers and guidance on April 25 but then gapped back down by an even larger margin less than two weeks later when its CEO and a co-founder suddenly resigned. The stock was above $19 at the end of April but posted a closing low of $13.35 on May 23.

Our systems show that 9,274 FIO options changed hands yesterday, twice the daily average over the last month. 
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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