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Broadcom Corporation (BRCM) Trader Wagers On End-of-Week Downside

Broadcom Corporation puts are flying off the shelves this morning

by 3/31/2014 10:41 AM
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Option Brief: Broadcom Corporation (NASDAQ:BRCM) puts are trading at an accelerated clip this morning. Nearly 1,300 puts have crossed the tape thus far, representing a 42% mark-up to the intraday average. The majority of the volume has centered on the weekly 4/4 31-strike put, and it appears one trader, in particular, is betting on near-term headwinds for the semiconductor stock.

Right out of the gate, a multi-exchange sweep of 1,000 contracts crossed the tape at the ask price of $0.28 apiece. Implied volatility jumped 6.6 percentage points, and volume handily outstrips open interest, pointing to buy-to-open activity. This theory is echoed by Trade-Alert, which suggested the new positions are replacing similarly bearish ones that expired last Friday. Delta for the put is docked at negative 0.37, implying a 37% chance of an in-the-money finish at this Friday's close.

Technically speaking, BRCM has been making modest headway in recent months, thanks in part to the support it has received from its 50-day moving average since early December. More specifically, the equity is up 20.4% from its Nov. 21 low of $25.96. In light of this, today's focus on the out-of-the-money weekly 4/4 31-strike put could be a result of a Broadcom Corporation (NASDAQ:BRCM) shareholder protecting against any near-term downside. In today's session, the stock is following in the bullish footsteps of the broader equities markets, though, and was last seen 0.7% higher at $31.25.


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