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InterDigital draws bearish position

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A trader is positioning for a potential drop in shares of InterDigital by the end of this week.

optionMONSTER's Depth Charge system shows that 2,500 December 30 puts were purchased for $0.55 to $0.70 in about 2 minutes on Friday. Open interest in the strike was 1,382 contracts before the trade appeared, clearly indicating that it is a new position.

These puts lock in the price where traders can sell the stock no matter no matter how far it might fall through the end of Friday's session. The contracts could be hedging a long position or making an outright bearish bet, but either way they will expire worthless if shares remain above $30. (See our Education section)

IDCC rose 0.34 percent to $32.15 on Friday. The wireless-communication technology company fell from the $39 after its last earnings report at the end of October and has been range-bound mostly between $32 and $34 since.

Total option volume in IDCC topped 7,300 contracts on Friday, 11 times its daily average for the last month. Overall calls outpaced puts by 3 to 1.

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