Market News

September 28, 2012  Fri 9:38 AM CT

Achillion Pharmaceuticals has been ripping higher, and one investor wants to protect the gains.

optionMONSTER's Depth Charge monitoring program detected the purchase of 3,000 October 10 puts for $0.65. Volume was almost twice previous open interest at the strike.

Owning those puts ensures a minimum sale price of $10 on the drug developer, so they will become more valuable if the shares push lower. That provides the investor with insurance so he or she can stay long following the stock's blistering run. (See our Education section for other hedging strategies.)

ACHN is up 4.32 percent to $10.74 this morning and more than 60 percent in the last month. Sentiment has brightened dramatically toward the name since the summer as investors have focused on the promise of its prospective hepatitis C treatment.

Overall option volume is triple the daily average so far today, with puts outnumbering calls by 11 to 1.
News Archives

Education & Strategy

Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

More education articles »