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Trader reduces bearish bet on ARM

David Russell (david.russell@optionmonster.com)

ARM Holdings has fallen sharply, and the bears are scaling back their bets.

optionMONSTER's Depth Charge monitoring system detected the purchase of 16,734 July 35 puts for $1.80 and the sale of 20,734 July 37 puts for $2.90. Volume was below open interest in the 37s, which suggests that an existing position was closed and rolled to the lower strike.

This lets the investor collect a credit of $3 million--possibly the same amount originally placed on the bet. He or she remains positioned to profit from further downside but has significantly reduced the amount of capital in the trade. (See our Education section for more on how options can be used to manage risk.)

ARMH is off 0.48 percent to $35 in morning trading and is down 23 percent in the last month. The U.K.- based maker of mobile chips more than doubled between July 2012 and May but has been pulling back more recently.

Total option volume is 10 times greater than average so far today, with puts outnumbering calls by 67 to 1.

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