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Protection on Adobe before earnings

David Russell (david.russell@optionmonster.com)

Adobe Systems reports earnings tomorrow afternoon, and investors are hedging their bets.

optionMONSTER's Depth Charge monitoring system detected the purchase of about 2,000 April 39 puts for $0.76 to $0.81. Volume was almost 4 times open interest at the strike.

The investor now has the right to sell ADBE shares for $39 through expiration, no matter how low they may drop. That will give him or her insurance against a pullback. (See our Education section for more on how options can be used to manage risk.)

ADBE is down off 0.22 percent to $41.29 in morning trading but is up 22 percent in the last year. The maker of artistic and publishing software has been climbing recently as it transitions to a subscription-based revenue model.

Total option volume is more than triple the daily average so far today, according to the Depth Charge. Puts outnumber calls by more than 20 to 1.

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