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Why Options Think Western Digital is Headed Lower

David Russell|writer, OptionMonster
Tuesday, 16 Jun 2009 | 4:33 PM ET

Options traders apparently think that Western Digital is headed lower.

OptionMonster's tracking systems detected heavy activity in the July 22.50 puts, which changed hands for $0.60 to $0.90 Tuesday morning. Volume surged to 20,882 contracts, more than three times open interest, with most of the trading in a strong buying pattern.

The trades did not include obviously large institutional-size blocks, however, so they may be the work of investors acting on a newsletter recommendation.

Western Digital is down more than 2 percent to below $25 in afternoon trading. The hard-drive maker, up 48 percent in the last three months, needs to fall at least 10 percent from current levels for the puts bought today to generate a profit.

Puts in Western Digital outnumbered calls by more than 14 to 1, reflecting the bearish sentiment.

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Options Trading School:

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Western Digital Competes With:

IBM

Hewlett-Packard

Dell

Cisco

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David Russell is a reporter and writer for OptionMonster.

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Disclaimer

  Price   Change %Change
CSCO
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4331
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HPQ
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IBM
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WDC
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