U.S. Markets close in 3 hrs 17 mins

Bearish strategy sets sights on EMC

David Russell (david.russell@optionmonster.com)

One investor is playing it safe in cloud-computing stock EMC.

optionMONSTER's Depth Charge tracking program detected the purchase of 5,000 July 25 puts for $2.12 and the sale of an equal number of July 26 calls for $1.62. Volume was more than 9 times open interest at both strikes.

The investor probably owns EMC shares and is using the options as a hedge. He or she paid $0.50 and now has the right to sell the stock for $25, no matter how fall it may decline. The position, known as a collar , also obligates the trader to exit for $26 if the stock closes above that level on expiration.

EMC is up 0.81 percent to $25.03 in morning trading and has lost 17 percent of its value after hitting an 11-year high of $30 in the spring. The company was a high flier coming out of the 2008 market crash as enterprises outsourced data storage, but its business has slowed this year amid weakness in Europe and cautious government spending in the United States.

The company's next earnings report is scheduled for before the bell on Jan. 29.

Total option volume is almost twice the daily average so far today, according to the Depth Charge.

More From optionMONSTER