Cummins draws bearish trade
Cummins traders think further downside is coming.
optionMONSTER's Depth Charge monitoring system detected the purchase of 3,200 Weekly 94 puts expiring on Dec. 4 for $0.55 to $1.35. Volume was more than 100 times open interest at the strike, which indicates new money was put to work.
Puts fix the price the price where a stock can be sold, so they make money to the downside. (See our Coaching section.). Investors use them to hedge long positions or to speculate on a drop.
CMI fell 6.37 percent to $93.98 in morning trading and is down 18 percent in the last three months. Today's drop follows a two-notch downgrade by Bank of America/Merrill Lynch. Weak global demand caused earnings and revenue to miss estimates on Oct. 27, and next set of numbers are estimated for pre-market hours on Feb. 4.
Overall option volume was 3 times greater than average, according to Depth Charge.
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