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July 26, 2013  Fri 12:21 PM CT

Traders apparently think that OmniVision Technologies is ready to come back to earth after a big pop earlier this year.

optionMONSTER's Depth Charge monitoring system detected the purchase of 3,000 September 17 puts for $1.425 and the sale of an equal number of September 14 puts for $0.30. Volume exceeded open interest at both strikes, indicating that new positions were initiated at both strikes.

Known as a bearish put spread, the trade cost $1.125 and will earn a maximum profit of 167 percent if the stock closes at or below $14 on expiration. That's roughly the same level where it traded in mid-May before a strong earnings report drove it higher late in the month.

OVTI is down 2.38 percent to $16.81 in afternoon trading. The provider of mobile imaging chips has spent almost two years licking its wounds from a major selloff in 2011. Its last quarterly release indicated that the tide may be turning for the better, with results much better than expected. Management also painted an optimistic outlook as the company gains customers in China.

The date of the next report hasn't yet been announced, but last year's calendar suggests that it will occur in late August. Today's downside trade would provide protection through that event, so the investor may be looking to protect a long position against potentially bad news. (See our Education section for other hedging techniques.)

Total option volume is 6 times greater than average in the name so far today, according to the Depth Charge. Puts outnumber calls by 24 to 1.
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