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An investor sells near-term puts in the communication network
Karla hosts and produces Options News and Mad About Options, and writes the Sidewinder report. Karla graduated from Colgate University, where she majored in English and Film and Media Studies. Despite strong earnings results from Cisco Systems (NASDAQ: CSCO), shares of competitor Juniper Networks Inc. (NYSE: JNPR) are currently down 1.5% on the day. At least one investor is calling for a floor in the stock in the near-term and expressing that bet by selling puts.
The near-the-money March 24 puts have crossed the tape more than 10,200 times versus current open interest of 670 contracts, suggesting investors traded these options to open. We saw several blocks go off close to the bid price of 83 cents per contract around 11:20 a.m. EST today, indicating investors sold these options betting on limited downside in the stock.
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The March 24 puts are currently trading up 11 cents on the day, which is lower than a delta of 35 would suggest.
Investors who sold these puts are capping their gain on this trade at 83 cents per contract, and will make money if JNPR shares close higher than $23.17 at March options expiration in 43 days. Additionally, the investor is factoring in a potential 7% drop in the stock. For this reason, this trade is more neutral than absolutely bullish.
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