OptionsHouse

Options Trading News

January 31, 2013  Thu 9:08 AM CT

MED: SEE CHART GET CHAIN FIND STRATEGIES
A relatively large put trade tops the action in Medifast as the stock is near six-month lows.
 
The 5,000 MED options have traded so far today constitutes unusual activity, as it averages volume of just 250 contracts a day for the last month.

A trader bought 2,500 March 22 puts for the ask price of $1.35 in a new position with volume that was 10 times the previous open interest at that strike. Seconds later, he or she sold 2,500 March 26 puts for $2.90 in volume that was below open interest of 2,625 at that strike.

This could be a credit spread but, given the action and the stock price, it appears far more likely to be a roll. In the latter case, the trader would be closing the higher-strike position and rolling the position down as the stock has slipped. (See our Education section)

MED is up 4.17 percent to $24.72, but it was above $28 at the start of the week and above $32 in mid-December. Yesterday's close was its lowest since the weight-management company gapped higher in late July.
Share this article with your friends


Invest Like a Monster - Las Vegas: March 13-14

Premium Services

Webinar Recording

Turbo Charge Your Trading Profits

Education & Strategy

The Strike-Based Greeks

The other Greeks (Gamma, Vega, and Theta) are calculated by using month and strike data, and not by individual option. These are called strike-based Greeks. Gamma, Theta, and Vega are all strike-based Greeks

View more education articles »