Shares of 3D printing hardware and software provider 3D Systems Corporation (DDD) has lost over 62 percent of its value in the past year. One trader sees a further drop ahead.
That’s based on the February $8 puts. With 59 days until expiration, 3,473 contracts traded compared to a prior open interest of 128, for a 27-fold increase in volume on the trade. The buyer of the puts paid $0.75 to make the bearish bet.
The stock recently traded around $8.20, making this an at-the-money trade. That’s down from nearly $10 a few weeks ago, and shares look on track to re-test their 52-week lows of $7.61, set back in November.
The company has lost money in the last year, and revenues have slid 15 percent. While 3D printing has a potential to improve manufacturing times and processes, the technology is still in its early stages, and it will take a few more years for a more comprehensive rollout.
Action to take: Investors may like shares, as 3D Systems is an industry leader in the space. But investors should consider waiting for a re-test of the lows, meaning a chance to buy shares closer to $7.50.
For traders, the February puts play well to the current short-term downtrend in shares. The bet is inexpensive, and can potentially pay off with high-double-digit returns in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.