Polypore puts bought before earnings

optionMONSTER

Polypore has been rallying hard this month, but some traders appear to be getting nervous before the company reports earnings after today's close.

optionMONSTER's Depth Charge system has detected heavy put buying in the August 40 strike, where almost 3,400 contracts traded as premiums rose from $0.60 to $0.90. The volume was far above the strike's open interest of just 503 puts before the session began, indicating that these are new positions.

These puts lock in the price where traders can sell the stock no matter how far it might fall, but they will expire worthless if PPO remains above $40 through the end of next week. Traders may be using the options to hedge a long position or to make an outright bearish bet. (See our Education section)

PPO is down 1.02 percent to $45.53 this afternoon. The manufacturer of filtration products gapped up from the $42 level a week ago and saw bullish buying in September 47.50 calls yesterday as it hit $46.65, its highest price since the start of 2013.

Total option volume in Polypore tops 6,500 contracts so far today, already more than 8 times its full-session average for the last month. Overall puts outpace calls by more than 2 to 1.

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