Why Options Think Western Digital is Headed Lower

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.

Options Trading School:



Western Digital Competes With:






David Russell is a reporter and writer for OptionMonster.