Schaeffer's Options Center
Sponsored by:
Schaeffer's Daily Option Blog

ARM Holdings Speculators Brace for a Pullback

Traders prefer puts on uptrending ARMH

by 12/7/2012 11:07 AM
Stocks quoted in this article:

Bearish bettors set their sights on ARM Holdings plc (NASDAQ:ARMH - 36.19) on Thursday, as put volume on the chip stock ballooned to double the expected level. A total of 1,400 puts changed hands on ARMH during the session, easily outstripping its typical daily put volume of 687 contracts. Meanwhile, 1,120 calls were exchanged, which is more or less the norm.

ARMH's December 35 put was the most active strike, as 1,125 contracts traded here. Nearly three-quarters of these front-month options crossed at the ask price, suggesting they were purchased, and open interest jumped overnight by 933 contracts. The volume-weighted average price (VWAP) checked in at $0.56, which means most of these put buyers will begin to profit if the stock moves below $34.44 (strike minus average premium paid) over the next two weeks until expiration.

Heavy put activity has become par for the course with ARMH, as evidenced by the stock's 10-day put/call volume ratio of 1.32 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks in the 68th annual percentile, suggesting that traders have purchased puts over calls at a faster-than-usual pace in recent weeks.

ARMH has racked up an impressive gain of 31.6% so far in 2012, and the stock recently staged an impressive breakout above longtime resistance in the $28-$32 neighborhood. In light of this technical setup, it's possible that some of these put buyers are actually ARMH shareholders looking to lock in some paper profits.

 Weekly Chart of ARMH since August 2010


permalink

Featured Brokers
ADVERTISEMENT
Unusual Option Volume
Option Flow
ADVERTISEMENT
Most Active Stocks
Most Active Option Strikes
Largest Open Interest

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.