Puts prepare for difficulties in NetEase
Mike Yamamoto | [email protected]
More than 2,500 December 39 puts traded in a strong buying pattern, almost all of them going for $0.45, according to optionMONSTER's Depth Charge system. Open interest was just 46 contracts at the beginning of the day, indicating that these are new positions.
These puts were not tied to any stock trading identified by our scanners yesterday, though they could have been bought as a protective hedge on a long position established earlier. The trader could also be making a straight bearish bet that NTES will fall roughly 7 percent the close of Dec. 21. If the shares are above the $39 strike price at that time, the puts will expire worthless. (See our Education section)
NTES fell 5.25 percent yesterday to close at $41.43. Shares of the Beijing-based online game company failed to break through resistance at the $56 level early this month and gapped lower after reporting disappointing third-quarter results on Nov. 14.
Total option volume in the name was quadruple its daily average in the last month. Puts outnumbered calls by more than 2.5 to 1.