Broadcom has bounced in recent days, but traders turned cautious on the wireless-chip maker yesterday.
optionMONSTER's Depth Charge system detected the purchase of about 5,600 April 42.50 puts for $0.57 to $0.63 and 2,550 April 42 puts for $0.48 and $0.49. Volume was well above the previous open interest in each strike, indicating that new positions were established.
Long puts lock in the price where the stock can be sold no matter how far it might drop, gaining value in a selloff. The contracts can be purchased either as an outright bearish bet or a hedge on a long position . (See our Education section)
BRCM fell 1.86 percent to $43.29 yesterday. The semiconductor name dropped sharply a week ago along with the rest of the sector and the broader market but bounced near $41 and is trying to get back above its 50-day moving average.
Total option volume in Broadcom topped 10,800 yesterday, more than double its daily average for the last month. Overall puts outnumbered calls by nearly 7 to 1.
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