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Check Point draws more put buying

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Traders are purchasing puts in Check Point Software for the second time in less than a week.

More than 5,500 July 50 puts traded in a heavy buying pattern yesterday as premiums rose from $1.05 to $1.20, according to optionMONSTER's Depth Charge tracking system. The volume was well above the strike's open interest of just 577 contracts before the session began, showing that these are new positions.

These puts lock in a sale price of $50 for the stock no matter how far it might fall. They could have been bought to protect a long position or to make a outright bet that CHKP will drop before they expire at the end of next week, one day before the security-software company releases second-quarter results. The trades followed put buying in the July 49 strike last Thursday . (See our Education section)

CHKP rose 1.83 percent yesterday to close at $51.83 and is now at a resistance level in place since early March. The stock hit support around $45 after its last earnings report in late April and then ran up sharply until hitting that resistance area in the next month.

Total option volume in the name was just shy of 9,000 contracts yesterday, 8 times its daily average for the last month, as puts outnumbered calls by more than 5 to 1. 

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