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Large put buying in CA Technologies

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Traders are positioning for a potential drop in CA Technologies, which reports earnings next week.

More than 8,300 November 28 puts were purchased yesterday, led by a single print of 7,000 that went for the ask price of $0.40, according to optionMONSTER's Depth Charge tracking system. This is clearly fresh buying, as open interest in the strike was just 1,584 before the trades appeared.

These puts, which weren't tied to any stock trades identified by our scanners yesterday, could have been bought to hedge a previously established long position or to make an outright bearish bet. Either way, the contracts will expire worthless if shares remain above the $28 strike price through mid-November. (See our Education section)

CA was up 0.9 percent to $29.75 yesterday as it tried to get back above 50-day moving average for the first time in three weeks. Shares of the enterprise-software company have been range-bound since early July, trading mostly between $29 and $31.

The company is scheduled to release its next quarterly report next Thursday, Oct. 24, after the close.

Total option volume in the name topped 9,800 contracts yesterday, 23 times its daily average for the last month. Overall puts outnumbered calls by 13 to 1, reflecting the session's bearish sentiment.

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