Options Trading News

March 20, 2013  Wed 11:44 AM CT

GlaxoSmithKline has had a nice pop, but now traders are turning bearish on the British pharmaceutical stock.

optionMONSTER's Depth Charge tracking program detected the purchase of about 5,700 April 45 puts, most of which priced for $0.45. Volume was more than quadruple previous open interest at the strike, indicating that a new position was initiated.

Those contracts lock in the price where shares can be sold. That is a strong inverse correlation to the stock price, meaning the puts will appreciate in value if GSK heads lower. (See our Education section)

Less than an hour later, some 2,300 April 47 calls were sold for $0.35 as an investor abandoned a bullish trade.

GSK is up 0.3 percent to $45.90 in afternoon trading. Our scanners detected unusual activity in the March 45 calls earlier in the month, handing traders quick profits as the shares bounced, but they've now returned to the same $46 level where they peaked in January and February. That could make some chart watchers believe that they're stalling at resistance.

Total option volume is 6 times greater than average in the name so far today, with puts outnumbering calls by almost 3 to 1.
Share this article with your friends

Related Stories


GlaxoSmithKline draws upside bet

September 11, 2015

A highly bullish combination trade is betting on a rebound in the drug company, which has yet to recover from last month's losses.

Invest Like a Monster - San Antonio: October 9-10


The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

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.

View more education articles »