Options Trading News

December 28, 2012  Fri 9:54 AM CT

Seagate Technology has seen a fair amount of bullish option activity in recent weeks, but today's trading is topped by a downside position.

optionMONSTER's Depth Charge tracking system shows that 2,000 January 30 puts traded in a strong buying pattern in less than 2 minutes this morning, led by a block of 1,462 that went for $0.57. Open interest in the strike was just 44 contracts at the start of the session, so this is clearly a new position.

STX is off 0.3 percent to $30.12 today. The computer hard-drive maker had been trending steadily lower since August but bounced strongly at the $25 level at the beginning of this month. The stock gapped above its 100-day moving average on Dec. 19 but has been trapped below resistance around $30.50 that has been in place since early October.

Today's puts were not tied to any stock trading identified by our systems, but they could have been purchased as a hedge on a long position established earlier to protect recent gains. These options could also be making a straight bearish bet that STX will fall roughly 2.5 percent by expiration in three weeks. Total puts in the name are outpacing calls by about 5 to 1 so far, a reflection of the bearish sentiment. (See our Education section)

Seagate and arch-rival Western Digital have seen bullish option activity this month as the sector continues to recover from the devastating 2011 floods in Thailand, where an estimated one-third of the world's hard drives are produced.
Share this article with your friends



The fastest money in the market
View full report »

Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »