Large volatility play targets Zoetis
Chris McKhann | [email protected]
More than 13,000 ZTS options have traded so far today, compared to a full-session average of just 456 contracts in the last month. Almost all of that action was in one print.
optionMONSTER systems show that 12,500 October 25 puts were purchased for the ask price of $0.80 this morning. This is clearly a new position, as open interest in the strike was a mere 21 contracts before the trade appeared.
Just after the puts were bought, the biggest block of stock traded as 262,500 shares were purchased for $28.65. The combination of stock and options creates a delta-neutral play that is looking for higher volatility. The position is very similar to a long straddle, so the trader is betting that the shares will make a big move up or down in by expiration in mid-October. (See our Education section)
ZTS is up 0.4 percent to $28.65 in midday trading. The company, which develops medicines and vaccines for animals, fell to $28.14 yesterday--its lowest price since going public in February 2013. Shares were up near $33 coming into 2014 but have been trending lower since.