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Fusion-IO investor buys protection

Chris McKhann (chris.mckhann@optionmonster.com)

Fusion-IO is slipping lower this morning, but one trader appears to be positioning against further declines in the data-storage company.

Total option volume in FIO tops 6,600 contracts, twice its daily average in the last month. The volume is almost entirely in a March combination trade, according to optionMONSTER's tracking systems.

A trader bought 3,100 March 19 puts, led by a block of 2,272 that went for $1.26. At the same time, he or she sold the same number of the March 29 calls for $1.06. The volume in each strike was more than 10 times the open interest at the beginning of the day, indicating new activity.

This appears to be a collar position to be a protecting a long stock position. The trader is using the sale of the calls to offset most of the cost of the long puts but gives up any upside beyond $29. (See our Education section)

FIO is down 2.36 percent to $23.18. The stock is in the middle of its range for the last month, trading mostly between $22 and $24. Over the longer term, shares were down at support at $18 into early August and resistance at $32 at the start of October.

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