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Put seller targets floor under Colfax

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Colfax fell after reporting earnings results yesterday morning, but one trader is positioning for a floor beneath the stock.

optionMONSTER's tracking systems detected the sale of 9,500 December 30 puts in less than 4 minutes yesterday, including one print of 8,711 that went for $0.35. The volume dwarfed open interest at the strike of just 33 contracts at the beginning of the day, clearly indicating new positions.

This put selling is looking for the CFX to be above the $30 strike price by expiration just before Christmas. If it is below that level, the trader will be required to purchase of shares at an effective price of $29.65 once the credit from the put sale is factored in. (See our Education section)

CFX declined 2.7 percent yesterday to close at $33.54. The maker of gas and fluid equipment fell sharply in the last week, falling below its 50-week moving average after failing to break through resistance near an all-time high at $37.47 three times this month.

Yesterday's trading pushed total option volume in the name to 26 times its daily average.

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