Fortinet Puts Ring Up Quick Winners

Bad Time for Bears Despite Fiscal Cliff: Money Manager

Fortinet fell hard last quarter, and the bears came back yesterday.

OptionMonster's tracking systems detected unusual activity in the January 20 puts shortly after the open, with buyers paying $0.25 to $0.30. More than 3,600 contracts traded by the end of the session, far above the strike's previous open interest of just 244 and therefore new positions.

Puts lock in the price where investors have the right to sell stock, so the options can generate some nice leverage in the event of a decline. That happened nicely yesterday because those puts more than tripled in value to $1.20 as the network-security stock pushed lower.


Fortinet shares fell 8.78 percent yesterday to close at $19.33. It gapped lower on Oct. 16 after the company lowered guidance, then rolled over after attempting to rebound in November and December.

Total option volume was 32 times greater than average in the name. There was also heavy call volume, but most of those were sold, which reflects a belief that upside will be limited.


—By CNBC Contributor David Russell

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David Russell is a reporter and writer for OptionMonster. Russell has no positions in FTNT.

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