Seagate trader buys more protection
David Russell | [email protected]
optionMONSTER's Depth Charge tracking program detected the purchase of about 10,000 February 34 puts for $1.63 and the sale of an equal number of February 32 puts for $0.85. Volume was below open interest at the lower strike, which suggests that an existing position was closed and rolled higher.
The investor probably owns shares in the maker of computer hard drives, which is up 37 percent since the beginning of last month. Owning the puts hedges the stock position against a decline, and moving them to a higher strike enhances that protection. (See our Education section)
The trader has now locked in a minimum selling price of $34, up from the previous $32 strike. He or she paid an incremental $0.78 in return for that greater peace of mind.
STX fell 0.46 percent to $34.30 yesterday but remains near its previous high from late last summer.
Total option volume was triple the daily average in the session, with puts accounting for almost two-thirds of the activity.