Options Trading News

January 25, 2013  Fri 2:14 AM CT

Finisar has pulled back from recent gains, but one trader is betting that the telecom-equipment maker will stay above a support level that held throughout 2012.

A block of 8,723 September 11 puts was sold for $0.90 yesterday, according to optionMONSTER's tracking systems. This is clearly a new position, as open interest in the strike was a mere 4 contracts before the day's trading began.

FNSR gained 1.24 percent yesterday to close at $13.89. Shares had climbed sharply after bouncing off multi-month support around $11 in mid-November but have declined since hitting resistance near $17 on the first trading day of 2013.

The stock gapped down from above $15 a week ago when Jefferies downgraded the name to "underperform" from "hold" and cuts its price target to $7.50 from $14, citing potential competition from Intel and Cisco. But Finisar's chart showed a bullish technical signal on Wednesday when its 50-day moving average rose above the 200-day average, according to researchLAB.

Yesterday's put seller is looking for FNSR to stay above the $11 support level through expiration in mid-September. If the stock is below that strike price, the trader will face the obligation to buy shares at an effective price of $10.10 once the credit from the put sale is included.

The trade made up the bulk of Finisar's total option volume yesterday, which totaled about 9,500 contracts versus a daily average of just 603 in the last month.
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