ISLN – Isilon Systems, Inc. – Shares of the provider of storage systems for file-based data rallied as much as 12.7% during the first half of the trading day to secure an intraday and new 52-week high of $20.10 on news Hewlett-Packard put Dell’s $18.00 a share offer for 3Par, Inc. to shame by submitting a $24.00 a share bid for the same company. A number of other enterprise storage companies are experiencing sharp share price increases following HP’s aggressive bid for PAR. Isilon Systems popped up on our ‘hot by options volume’ market scanner, however, after one contrarian player purchased a plain-vanilla debit put spread in the December contract. Perhaps the transaction is an outright bearish bet initiated by an investor expecting ISLN’s shares to decline significantly by December expiration. Alternatively, the spread may be the work of a cautiously optimistic individual establishing downside protection to hedge a long position in ISLN shares. Regardless of the true motivation behind the transaction, the spread involved the purchase of 3,000 puts at the December $17.5 strike for an average premium of $1.80 each, and the sale of the same number of puts at the lower December $12.5 strike for premium of $0.25 apiece. The net cost of the spread amounts to $1.55 per contract. If the put player is initiating an outright bearish stance on the stock, profits start to accumulate if Isilon’s shares plunge 20.65% from today’s high of $20.10 to breach the effective breakeven point to the downside at $15.95 by expiration day in December. Maximum potential profits of $3.45 per contract in that scenario are available to the investor if ISLN’s shares collapse 37.8% lower to trade beneath $12.50 ahead of December expiration. The put spread, assuming the responsible party maintains the position through expiration, may also be helpful if the company’s October 21 third-quarter earnings report is disappointing.