OptionsHouse

Options Trading News

November 29, 2012  Thu 3:47 AM CT

MDVN: SEE CHART GET CHAIN FIND STRATEGIES
Two cancer-drug developers have made giant moves, and an investor is apparently hedging positions in both.

optionMONSTER's Depth Charge monitoring program detected protective trades in Medivation and ONYX Pharmaceuticals at almost the same time yesterday. They were remarkably similar in structure as well, suggesting a single player was behind the activity.

In ONXX, they purchased 2,000 December 72.50 puts for $2.20 and sold 2,000 December 85 calls for $0.25. Seconds later, 2,000 December 46 MDVN puts were bought for $1.50 and 2,000 December 57.50 calls were sold for $0.10. The ONXX trade resulted in a debit of $1.95, while the MDVN transaction cost $1.40. Volume exceeded open interest at all four strikes.

The investor has now locked in minimum selling prices of $72.50 for ONXX and $46 for MDVN. The trader has also agreed to sell the shares if they go to $85 and $57.50, respectively. (The strategy is known as a collar.)

ONXX rose 1.13 percent to $76.06, while MDVN climbed 2.38 percent to $49.96. Both stocks are up more than 70 percent so far this year but have been skidding in the last two months.

Total option volume was triple the daily average in ONXX and 5 times greater than average in MDVN, according to the Depth Charge.
Share this article with your friends


Related Stories

MDVN

Can anything slow Medivation?

February 27, 2015

The biopharmaceutical company has broken out to new highs yesterday, and traders apparently think there's no going back.

OptionsHouse

Premium Services

Webinar Recording

Turbo Charge Your Trading Profits

Education & Strategy

Gamma

As we continue to discuss the Greeks, we come to the first of the strike based Greeks called Gamma. Gamma is known as the second derivative, while delta is the first.

View more education articles »