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Puts Popular as GT Advanced Technologies Inc (GTAT) Taps the Brakes

GT Advanced Technologies Inc's August 20 put was bought to open on Friday

by 6/30/2014 9:10 AM
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GT Advanced Technologies Inc (NASDAQ:GTAT) finished slightly lower on Friday, but still maintains its 109.4% year-to-date lead. In spite of the equity's withstanding technical prowess, option bears bet on an extended retreat for the stock over the next seven weeks, specifically, buying to open the security's August 20 put.

With GTAT trading at $18.26, these puts are currently in the money. However, based on the volume-weighted average price (VWAP) of $2.90, breakeven at the close on Friday, Aug. 15 -- when back-month options expire -- is $17.10, or the strike less the VWAP. Profit for the put buyers will accrue on a move all the way down to zero, while risk is capped at the initial cash outlay, should the stock settle above the strike at expiration.

This skepticism toward GT Advanced Technologies Inc (NASDAQ:GTAT) is witnessed outside of the options pits, as well. In fact, short interest accounts for more than one-third of the equity's available float. Good news for these bearish traders -- the stock is poised to extend Friday's decline in today's session, after projecting a roughly $13.4 million charge over the second and third quarters, due to a realignment of operations.


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