Owning puts locks in the price where investors can sell a stock, so the lower it goes, the more the they are worth. These options can be used as insurance policies to protect long positions, but are also ideal for outright bearish trades.
Paychex shares fell 0.72 percent to $33.17 yesterday. It gapped lower in the previous session after the company reported a lackluster quarter, with earnings beating expectations by a narrow margin, but revenue missing the mark.
Given that the stock was near multiyear highs when the news came out, expectations were very optimistic. Based on yesterday’s trades, the bears apparently believe that further selling may now take place.
Total option volume was more than seven times greater than average in the session, with puts accounting for more than 80 percent.
—By CNBC Contributor David Russell
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David Russell is a reporter and writer for OptionMonster. Russell has no positions in PAYX.