Downside position in Achillion Pharma
Mike Yamamoto | firstname.lastname@example.org
optionMONSTER's Depth Charge system detected the purchase of 2,122 January 7.50 puts in the last 40 minutes of trading on Monday, almost all of them going for $0.20. The volume was well above the strike's open interest of 681 contracts at the start of the session, indicating that it was fresh buying.
ACHN fell 1.93 percent on Monday to close at $8.63. The stock had been trading above $11 as recently as October with optimism over a prospective hepatitis C treatment but fell sharply to the $7 level in less than a month. Shares have been climbing since early December and are now facing resistance just below $9.
The put buying wasn't tied to any stock trades identified by our systems on Monday, though they could have been bought to hedge a long position established earlier. The options could also be making a straight bearish bet that the stock will fall more than 15 percent by expiration on Jan. 18. (See our Education section)
The trades made up almost all the option volume in the name, which totaled 2,575 contracts and was nearly 4 times its daily average. Puts outnumbered calls by 5 to 1.