Paper bought 8,000 SMH Aug 52 puts & sold 16,000 Aug 48 puts for a net debit of .25.
Market Vectors Semiconductor Holders, trading 55.70 with an IV30 of 22.65 and an HV10 of 41.75, saw a put 1 by 2 trade.? The stock, with an ADV of 5400 and an OI of 198,000, saw a customer buy 8,000 of the August 52 puts for .85 and then sell 16,000 of the August 48 puts at .30 net the customer paid a debit of the .25 for the August 52/48 put 1 by 2.
This is likely a hedge.? The customer is looking to set up a cheap hedge in SMH where he or she is protected down to 48 dollars a share, which would be just under a 15% drop between now and August expiration.? If the stock DOES drop below 48 dollars the trader begins to run into trouble with the hedge at 44.25, or a 20% drop in SMH.
This trade should be considered bearish SMH and bearish SMH volatility.