Whether it involves calls or puts, the option activity has been a great tell in Seagate Technology.
The maker of computer hard drives has frequently appeared on our Heat Seeker and Depth Charge trade scanners as investors correctly anticipated moves in the share price. Bulls and bears both made money on the stock in November, and this month they chalked up an additional 50 percent on the long side.
Today the activity is neutral but with a bullish bias. optionMONSTER's tracking programs detected the sale of about 5,800 December 29 puts, most of which priced for $1.26 to $1.38 against open interest of 3,569 contracts.
The investor is now obligated to buy STX for $29 if it closes below that price on expiration, but the entry price would be $27.74 to $27.62 including the credit earned. The choice of in-the-money contracts also essentially makes the trader long shares because the puts will closely track movements in the stock price. (See our Education Section for more.)
STX rose 1.3 percent to $28.11 in morning trading. It more than doubled between January and August, then pulled back and has started to rally again this month.
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