Options Trading News

A big investor is taking another shot at Western Digital after the stock failed to rally as much as expected.

optionMONSTER's tracking systems detected the sale of 13,600 July 34 calls for $0.56, while equal-sized blocks were purchased in the July 26 puts for $0.50 and the July 39 calls for $0.11.

Seconds later, 14,500 July 32 calls were bought for $1.14. This time the trading was matched against similar blocks in the July 25 puts, sold for $0.33, and the July 36 calls, sold for $0.26.

Volume was below open interest in the initial trades of 13,600 contracts each and below open interest in the following blocks of 14,500 each.

It appears the investor had previously opened a three-way strategy that involved selling puts and upside calls to finance a bullish position in the calls. He or she then closed the strategy and reopened it in slightly larger size at different strikes.

Adjusting the trade yesterday lowered the price at which it will make money, while costing an additional $865,500. The trader stands to collect $5.8 million if the stock goes back to $34.

The activity was remarkably similar to a transaction in rival Seagate Technology last week, suggesting that both trades were the work of a single large investor. Both Western Digital and Seagate make computer hard drives and have pulled back after major rallies.

WDC fell 0.65 percent to $30.34 yesterday. Overall option volume was 14 times greater than average in the session.