Applied Materials Investors Brace for Decline

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David Russell, reporter for OptionMonster.

Options traders are buying puts in Applied Materials(AMAT Quote) today as investors position for a pullback before the chip equipment company reports its quarterly earnings tomorrow.

Volume in the June 10 puts surged past 10,000 against open interest of 1,362 contracts, according to OptionMonster's monitoring systems. Most of the transactions were executed at or near the asking price, which reflects strong buying interest.

Applied Materials is flat on the session at $11.89 in midday trading. The company will release fiscal second-quarter earnings after the market closes tomorrow. The last time Applied Materials reported quarterly results in February, management said weak demand would cause full-year sales to decline.

Overall put volume in Applied Materials today exceeded calls by more than 2 to 1, reflecting a generally bearish tone.