Options Trading News

December 24, 2012  Mon 3:16 AM CT

Traders are counting on Repros Therapeutics to stay above current levels as the biopharmaceutical company tries to break through key technical resistance.

optionMONSTER's tracking systems detected the sale of 4,035 January 15 puts on Friday, led by two prints of 2,374 and 1,000 that both went for $0.80. Open interest in the strike was just 95 contracts at the beginning of the day, so this is new positioning.

These short puts are looking for RPRX to stay above the $15 strike price at expiration in mid-January. If shares are below that level at that time, the trader faces the obligation to buy the stock at an effective price of $14.20 once the credit from the option sale is included. (See our Education section)

RPRX rose 2.67 percent on Friday to close at $15.38, right at resistance that has been in place since shares fell from their 52-week high of $17 in early October. The stock has found support at its 100-day moving average, and a week ago it broke above its 50-day average for the first time in a month.

Friday's trading pushed total option volume in the name to 4,692 contracts, 5 times its daily average for the last month.
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I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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