U.S. Markets open in 1 hr 9 mins

How traders are hedging Adobe

David Russell (david.russell@optionmonster.com)

Adobe Systems has made a stunning move higher, and now traders want to protect those gains.

optionMONSTER's Depth Charge monitoring program detected the purchase of more than 10,000 March 65 puts today, most of which priced for $1.17 to $1.41. Volume was almost 11 times open interest at the strike, clearly indicating that new positions were initiated.

Puts lock in the price a stock can be purchased, letting investors hedge long positions or wager on a drop. Today's buyers probably own shares in the software maker and want to guard against a pullback. (See our Education section)

ADBE is down 0.29 percent to $68.14 in morning trading but is up 15 percent since the beginning of the month. The stock broke out to all-time highs in October and has been running since, supported by a successful shift to a subscription-based revenue model.

Overall option volume is almost 7 times greater than average in the session, according to the Depth Charge. Puts account for more than two-thirds of the total.

More From optionMONSTER