By David Russell
Check Point Software (CHKP) keeps rallying higher, and the bulls aren't losing faith yet.
optionMONSTER's tracking systems detected the sale of about 5,000 July 32.50 puts for $0.90, pushing volume in the strike to nearly three times open interest. The trade reflects confidence in the software company, which would have to lose 9 percent of its value through expiration for the investor to lose money.
CHKP rose 0.17 percent to $34.76 on Friday and is up 6 percent in the last month. The maker of data-security products has been climbing steadily along with bullish options activity in the past year. It's now trading at its highest levels since March 2002.
The trader may have chosen the 32.50 strike to write the puts because it's close to the $30 level where the shares found support last month after correcting lower.
The transaction follows a similar transaction on February 25, when an investor sold October 30 puts to earn premium. The activity reflects an expectation CHKP will hold its ground and implied volatility will decline, eroding the value of the options sold short.
A straddle was also written in December, which follows the same pattern.
Implied volatility has been steadily waning in CHKP and now stands at the lowest level in at least three years.
Some 6,803 contracts changed hands in Friday's session, five times greater than average.
(Chart courtesy of tradeMONSTER)