Options Trading News

June 11, 2013  Tue 11:10 AM CT

AmerisourceBergen has been staggering since a poor earnings report in April, and the options paper is cautious today.

optionMONSTER's Depth Charge monitoring system detected the purchase of more than 13,000 August 50 puts, most of which priced for $0.75 to $0.95. Volume was more than 80 times higher than the previous open interest at the strike, clearly showing that these are new positions.

These puts lock where shares can be sold in the pharmacy-benefits company, which gives them an inverse relationship to the stock price. Investors use them as insurance to protect long positions against drops and to place speculative downside bets. The shares are climbing today despite the downside option trades, which suggest that the activity was protective rather than outright bearish. (See our Education section)

ABC is up 2.21 percent to $54.90 in early afternoon trading. It rallied almost 50 percent between last summer and late April, only to fall sharply after quarterly earnings and revenue missed expectations.

Almost 19,000 contracts have changed hands so far today, more than 30 times greater than average. Puts account for 95 percent of the total.
Share this article with your friends


Premium Services

Education & Strategy

The art of trading

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.

View more education articles »