The bears are targeting AVG Technologies as the software stock falters after a huge run.
optionMONSTER's Depth Charge monitoring program detected the purchase of 5,000 March 17.50 puts for $1.85 and the sale of 4,300 December 20 puts for an average premium of $2.425. Volume was below open interest in the December contracts, indicating that an existing position was rolled down in price and out in time.
Puts lock in the price where AVG can be sold, giving them an inverse correlation to the stock price. Traders use them to speculate on a drop or to hedge long positions . (See our Education section)
Yesterday's transaction was unusual because the number of contracts was increased, which suggests that the trader adjusted a winning bearish position in hopes of further downside. He or she also put an additional $117,750 of capital behind the bet.
AVG fell 0.45 percent to $17.67 yesterday. The stock more than doubled between April and September but has been falling sharply since. It's down 28 percent in the last month, with much of that drop following the last quarterly report on Nov. 7.
Total option volume was 5 times greater than average in the name, according to the Depth Charge. Puts outnumbered calls by a bearish 26-to-1 ratio.
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