This was from yesterday, so today's drop doesn't make sense:
October 8, 2012
07:47 EDT VMW VMware may have closed a number of large deals, says JMP Securities
JMP Securities believes that VMware may have closed a number of million dollar deals and obtained several significant federal contracts in Q3. The firm maintains a $125 target and Outperform rating on the stock.
This is just a gun for stop-loss orders. Someone SOLD (yes, SOLD) a lot of $90 Put contracts, which is a bullish sign.
There was a block of 1,426 Oct $90 Puts sold at 7:10 a.m. at $1.65 when the bid/ask was $1.65-$1.75 -- which means it was a sell. Before that there was a flurry of smaller SELLS of the $90 Strike Put contracts.
Normally a trader sells puts when:
a) They are taking profits on an EXISTING Put position, meaning they got the downside they wanted and they don't think it's going lower, or,
b) They are initiating a position being short the puts because they don't mind having the STOCK "put" to them when they're bullish and think the stock will be higher and they'll be able to buy back their puts at a lower price and profit on the puts.
This is crazy. We got three upgrade in the last two weeks and it droped like crazy.
I guess it goes down with the market. Should be up soon since they lock down huge contract with the government in Q3. Good Luck