Large buyer targets NetApp near lows
David Russell | firstname.lastname@example.org
optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,000 March 34 calls for $0.88 and the sale of an equal number of March 22 puts for $0.95. Volume was more than 10 times open interest at each strike, indicating new activity.
The trader collected a credit of $0.07 and now stands to make money from the data-center stock rallying into the spring. The short puts will lose value while the long calls appreciate if the shares climb, but the opposite will happen to the downside. The position will track the shares less closely as time passes and expire worthless if they remain between $22 and $34. (See our Education section)
NTAP fell 3.48 percent to $26.91 yesterday and has lost more than one-quarter of its value since hitting resistance at its 200-day moving average in late September. The stock has suffered from negative sentiment in the technology space as companies and governments delay investments in cloud computing.
Yesterday's closing price was NetApp's lowest since October 2009. The next earnings release is tentatively scheduled for Nov. 14, which could potentially move the stock.
Overall option volume was triple the daily average, according to the Heat Seeker.