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Traders hedge Texas Instruments

Investors appear to be protecting gains in Texas Instruments with shares near 15-year highs.

optionMONSTER's Depth Charge system shows that about 5,000 November 56 puts were purchased for $0.79 to $0.93 this morning. Volume is well above the strike's open interest of 1,280 contracts, indicating that new positions were established.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff. The contracts can be used to make outright bearish bets, but today's puts are likely protective hedges on long-stock positions given how far shares have rallied. (See our Coaching section)

TXN is down 0.79 percent to $56.22 in early trade. The chip maker gapped up from below $52 on Oct. 22 after quarterly earnings and revenue beat expectations. It reached $59.67 a day later, pennies off its 52-week high and its best levels since September 2000.

Total puts are outnumbering calls in TXN by 15 to 1 so far today.

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