Cognizant Technology Solutions is trying to rebound, but the bears want to send it lower.
optionMONSTER's Depth Charge monitoring system detected the purchase of 1,700 August 57.50 puts for $1.97. Equal-sized blocks were sold in the August 52.50 puts for $0.70 and the August 65 calls for $0.80. Volume was more than quadruple open interest at all three strikes.
The trade combines elements of a bearish put spread with a collar strategy to generate significant leverage to the downside in the technology-outsourcing stock. It cost $0.47 and will earn a maximum profit of 964 percent if the shares close at or below $52.50 on expiration. (See our Education section)
CTSH is up 0.67 percent to $59.79 in morning trading but has lost more than one-fifth of its value in the last three months. Most of that decline occurred on May 7, when management cut guidance because of weakening demand.
The shares have been holding their ground since then and are now back near the top of their recent range. That could make some chart watchers think that it's a good time to expect another push lower.
Overall option volume is almost triple the daily average so far in the session.
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