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Options Traders Target Applied Materials

Traders are buying large blocks of puts in Applied Materials as the company's stock continues to slide, after it reported weak earnings early last week.

The chip equipment maker's stock has fallen some 20 percent since reporting a 35 percent drop in year-over-year revenues and a quarterly loss of $133 million, closing yesterday at $8.34.

The options activity was focused on AMAT's July 7 and July 8 puts, bought in significant blocks for $0.75 and $1.20 respectively, according to OptionMonster's tracking systems.

A large cash balance and low debt are positives for Applied Materials, but the institutional put buying points to some negative pressure that may still exist on the battered stock, which is down about 62 percent from its 52-week high. AMAT has jumped into solar energy but expects no orders for its SunFab panel technologies in 2009.

Disclosures:

I have positions in AMAT.

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Chip Industry Players:

Micron Technology

Intel

Rambus

Semiconductor HOLDRS ETF

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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.

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Disclaimer

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