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Option Brief: Juniper Networks, Inc. (NYSE:JNPR) puts were in high demand on Tuesday, as traders bearishly positioned themselves ahead of the company's turn in the earnings confessional last night. By the time the dust settled, roughly 20,000 puts had crossed the tape -- more than 16 times the average daily volume.
The most active strike on the day was JNPR's November 20 put, which saw nearly 11,200 contracts change hands. While several mid-sized blocks that were tied to the stock traded at the bid price, a healthy portion of the calls went off on the ask side. Implied volatility soared 7 percentage points, and open interest jumped overnight, making it safe to assume that a fresh batch of long put positions was initiated. Data from the International Securities Exchange (ISE) confirms that a portion of the day's volume was of the buy-to-open variety.
By initiating the puts, traders expected JNPR to move south of the round-number $20 mark following last night's quarterly report. More specifically, speculators will begin to profit with each step south of $19.24 (strike less the volume-weighted average price of $0.76) the stock takes over the course of the put's lifetime. Thanks to today's earnings-induced drop, JNPR breached this breakeven level earlier in the session.
For JNPR's third quarter, the network infrastructure provider beat analysts' estimates on both the top and bottom lines. However, a soft revenue forecast for the current quarter and restructuring plans are overshadowing last night's results, as well as a round of upbeat brokerage notes. At last check, Juniper Networks, Inc. (NYSE:JNPR) was down 4.2% to trade at $19.50.