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Bears targeting SBA Communications

David Russell (david.russell@optionmonster.com)

One big investor is bracing for a pullback in SBA Communications, which has been rallying for years.

optionMONSTER's Depth Charge monitoring system detected the purchase of 5,000 September 70 puts, most of which priced for $1.20. Another 5,000 contracts traded minutes later, this time in the December 65 puts for $1.10. Volume was more than quadruple the previous open interest at each strike, indicating new activity.

Puts lock in the price where shares can be sold in the owner of cellular towers, so they will make money if the stock declines. Traders use them to insure long positions against pullbacks or place downside bets. (See our Education section)

SBAC fell 3.28 percent to $74.85 in morning trading. It appreciated more than 50 percent between mid-May 2012 and mid-May 2013 but then stalled at an all-time high around $80 and has been rolling over in the last week.

Total option volume is 38 times greater than average in SBAC so far today, according to the Depth Charge. Puts outnumber calls by 23 to 1.

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