Option players are also getting short with the shares of VMware. During the past 10 days, traders on the International Securities Exchange (ISE) have bought to open more than two puts for every call. The equity's ISE 10-day put/call ratio of 2.19 ranks higher than 97% of other such readings taken during the past year (in other words, VMW's option volume on the ISE has been more skewed toward puts just 3% of the time in the past 52 weeks).

Judging solely by the security's price action, this widespread bearish sentiment seems well-deserved. VMW is down nearly 75% during the past 52 weeks, and it's leaning heavily on round-number support at 20. If the shares keep resting on this region, support here could weaken and eventually give way. Plus, VMW has been unable to surmount resistance from its 10-week and 20-week moving averages since June 2008.

Overall, it looks like the market has low expectations for VMW's fourth-quarter earnings report. The heavy levels of pessimism on Wall Street could act as something of a buffer in the event that earnings come in worse than expected; with very few bulls remaining in VMware's camp, the stock won't exactly be smacked by a large-scale unwinding of long positions.

However, this is not to suggest that the worst is over for VMW. Even if the company reports a pleasant surprise, any post-earnings rally could meet its demise in the form of solid trendline resistance. Plus, a breach of support at 20 would leave the shares fumbling for a floor, and it could prompt another round of selling on this struggling tech stock. Ahead of earnings, this groundswell of bearish bets on VMW looks like smart money to us.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.