GT Advanced Technologies has stalled near all-time highs, and one trader is looking for shares to drop.
optionMONSTER's Depth Charge system shows that more than 3,200 August 20 puts were bought well in the money this morning, with the biggest block of 1,436 going for $2.90. It is clearly a new position, as open interest in the strike was a mere 9 contracts before the trade appeared.
This trade is likely making an outright bet that GTAT will drop in the next two months rather than buying protection on a long position. Traders who buy in-the-money puts are bearish, while hedgers use at- or out-of-the money puts that cost less and have no intrinsic value . The strategy is often used as an alternative to shorting a stock which carries far more risk. (See our Education section)
GTAT is down 0.87 percent to $18.33 today. It has been testing long-term resistance at $19 for the last two weeks. Shares pulled back after hitting a lifetime high of $19.44 on March 21 but bounced at their 100-day moving average last month and have been trending higher from support at $13 in the last six weeks.
The stock is up more than 400 percent in the last year and has seen bullish option activity repeatedly along the way. GTAT makes solar-energy products but has diversified into sapphire touchscreens and other technologies with high growth potential.
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