Options Trading News

December 18, 2012  Tue 2:45 AM CT

Amgen is near its highs of the year, and one trader is betting that the biotechnology company will hold onto most of its gains by the end of this week.

Nearly 2,500 December 87.50 puts were sold mostly for $0.17 yesterday, according to optionMONSTER's systems. The volume was above the strike's open interest of 1,636 contracts at the beginning of the day, indicating new activity.

AMGN rose 0.34 percent yesterday to end the session at $89.50. Shares bounced off support at the $84 level in mid-November and have been trending higher since then, hitting a 52-week high at $90.17 last Wednesday.

After last Thursday's close, Amgen said it was raising its quarterly dividend by 31 percent. It also announced it would repurchase $2 billion of its shares, in addition to an an existing $10 billion stock-buyback plan.

Yesterday's put sellers are looking for the stock to be above the $87.50 strike price at expiration upon this Friday's close. The traders will face the obligation to buy shares if they are below that level for an effective price of $87.33 including the credit from the put sale. (See our Education section)
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I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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