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ValueClick Skeptics Target a Round-Number Rejection

VCLK speculators scooped up February-dated puts

by 1/7/2013 10:44 AM
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Puts were the options of choice on ValueClick Inc (NASDAQ:VCLK - 19.33) last Friday, with 4,200 of these bearishly oriented contracts crossing the tape -- easily outstripping the 222 calls that changed hands. This flurry of activity was a major increase over the norm for VCLK, which typically sees only 34 puts change hands on any given day.

Most active was the tech stock's February 20 put, where 3,042 contracts were exchanged. The majority of these back-month puts traded at the ask price, and open interest at this strike rose over the weekend by 2,941 contracts -- confirming that new puts were bought to open here on Friday.

These puts traded at a volume-weighted average price (VWAP) of $1.28. Based on this cost of entry, put buyers need VCLK to fall below breakeven at $18.72 (strike price less VWAP) before February-dated options expire -- which occurs after the close on Friday, Feb. 15.

Technically speaking, VCLK has been trekking higher since bottoming near the $15 level last summer. However, the shares have lately stalled out around the round-number $20 level, so put players could be bracing for VCLK to pull back from this area over the coming weeks.


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