Traders are positioning for a potential drop in Texas Instruments after its reports earnings next week.
optionMONSTER's Depth Charge system identified heavy buying in the Weekly 49.50 calls that expire on July 24, with about 4,700 trading for $0.98 to $1.17 yesterday. This represents new positioning, as volume was quadruple the strike's open interest.
Long puts lock in the price where a 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-stock position . (See our Education section)
TXN slipped 0.54 percent to $49.49 yesterday but bounced near the $48 level a week ago. The chip maker gapped down from above $58 after its last quarterly results in April and has fallen further in recent weeks with weakness in the semiconductor sector.
The company is scheduled to announce quarterly results on Wednesday after the market closes, two session before yesterday's puts expire.
Overall option volume in the name was just shy of 11,000 yesterday, more than 40 percent higher than its daily average for the last month. Puts made up nearly 60 percent of that total.
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