Dolby Faces Bearish Trade

By David Russell

Options traders are betting against Dolby Laboratories (DLB).

Some 2,291 June 40 puts changed hands for $2.35 to $3.30 against open interest of just 99 contracts. optionMONSTER's Depth Charge monitoring systems determined the bulk of the transactions were executed at or near the asking price, which suggests a strong buying pattern.

DLB is down 2.16 percent to $37.65 in afternoon trading, after failing to break the $40 mark three times in the last month. DLB is now losing ground gained after the last earnings report when it beat estimates and raised the lower end of its forecasts.

The $40 level could also be important to some traders because it's where DLB traded in late September before the broad equity-market collapse. The stock is also up 47 percent from its February low.

Puts in the name outnumber calls by 13 to 1 today, reflecting a broadly bearish tone.

(Chart courtesy of tradeMONSTER)

Comments

[4Foolz:]

There are many reasons people buy and sell puts but mainly they are part of some sort of a hedge, not outright bet against the stock. For every buyer, there is a seller that thinks the opposite. All this does not equate to a bearish sentiment on the street for DLB.

May 25 10:34 AM