Options Trading News

March 22, 2013  Fri 4:14 AM CT

EMC has seen bullish option activity on several occasions recently, but yesterday traders were positioning for a potential drop before its earnings report next month.

optionMONSTER's Depth Charge system shows that 4,806 April 20 puts were purchased for $0.04 at the same second yesterday morning. The volume was 3 times higher than the strike's open interest of 1,558 before the session began, indicating that this is fresh buying.

These puts, which lock in the price where traders can sell shares no matter how hard they might fall, were not tied to any stock activity identified by our scanners yesterday. They could have been bought as a hedge on a long position established earlier or as a cheap bearish bet that EMC will plunge below $20 four weeks from today. (See our Education section)

The data-storage company will announce first-quarter results on April 24, a few days after the puts expire. Management is then scheduled to hold its annual sharehold meeting on May 1.

EMC fell 1.41 percent yesterday to close at $24.50, right at its 100-day moving average and just above its 50-day line. Shares had risen sharply this month but hit resistance around the $25.50 level a week ago and have been pulling back since.

Traders have been made bullish bets on the name several times in the last few months, mostly recent by buying the May 26 calls on March 11 and the May 23 calls on Feb. 26, as noted at the time on our InsideOptions Pro service.
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