End seen for DreamWorks nightmare

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DreamWorks Animation has fallen back to support near its lows for the year, but one trader apparently believes that further downside will be limited.

More than 2,500 June 15 puts were sold in 2 seconds on Friday, led by a single print of 1,680 that went for $0.95, optionMONSTER's systems show. Open interest in the strike was a mere 39 contracts at the beginning of the day, so this is clearly new positioning.

DWA slipped 1.89 percent on Friday to close the week at $17.13, not far from the 52-week low of $16.35 from at the beginning of the year. The studio's shares now sit at the $17 support level that has been tested several times since then.

The stock ran up to a 52-week high just shy of $23 on Nov. 2 after reporting strong third-quarter results led by the success of "Madagascar 3." But Dreamworks drew bearish option activity just before Thanksgiving and gapped lower on the first session after the holiday when disappointing box-office numbers came in for its latest movie, "Rise of the Guardian."

Friday's short puts are looking for the stock to be above the $15 strike price at expiration in mid-June next year. If the shares are below that level, the traders face the obligation to buy the stock.

The trading pushed total option volume in DWA to 4 times its daily average in the last month.

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