Options Trading News

December 6, 2012  Thu 3:20 AM CT

Exact Sciences got hammered in October, and now the bears are back.

optionMONSTER's Depth Charge monitoring program detected the purchase of more than 4,100 April 7 puts, most of which priced for $0.75. Volume was more than 80 times open interest at the strike.

Those puts lock in the price where shares of the drug developer can be sold. They can appreciate in value if it drops or the market anticipates a decline. Investors use the contracts to hedge existing long positions or as a less-risky alternative to short-selling the stock. (See our Education section)

EXAS ended yesterday's session flat at $9.69. It had peaked at a nine-year high over $12 about two months ago but then tumbled toward $9.

The stock has been lingering below its 200-day moving average since and is now pausing at its 50-day moving average. That could make some chart watchers expect a steeper push lower.

Total option volume was 26 times greater than average in the name yesterday, with puts accounting for three-quarters of the total.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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