Pullback Forces DSKY Traders to Switch Sides

Over the past 10 weeks, traders have been buying to open iDreamSky Technology Ltd (ADR) (NASDAQ:DSKY) calls over puts at a rapid-fire pace. The mobile gaming stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio stands at 5.20 -- meaning more than five calls have been bought to open for each put.

However, that's not the case today, as puts are outpacing calls by a more than 4-to-1 margin, and changing hands at 21 times the expected intraday pace. The strike seeing the most activity is the May 7.50 put. which it appears is being bought to open. If so, these traders are betting on DSKY to slide below $7.50 before the close this Friday, when the options expire.

The sudden focus on puts comes as the stock finds itself on the short-sale restricted list today, amid a sharp pullback. At last check, the shares were 3.7% lower at $8.43, after a critical report from The Pump Stopper referred to DSKY as a "walking zombie." This is more of the same for iDreamSky Technology Ltd (NASDAQ:DSKY). The security gapped lower in mid-March, and has trailed the S&P 500 Index (SPX) by more than 27 percentage points during the past three months.