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December 10, 2013  Tue 3:47 AM CT

QCOR: SEE CHART GET CHAIN FIND STRATEGIES
A large trader is betting that Questcor Pharmaceuticals will bounce next year.

optionMONSTER's tracking systems detected the purchase of 5,000 April 60 calls for the ask price of $6.40 and the sale of 5,000 April 40 puts for the bid price of $5.60. Volume was above the previous open interest in each strike, indicating new activity.

This combination trade is highly bullish, as a rally would boost the premiums of the long calls while lowering the value of the puts sold short. But the opposite would occur if the stock drops, and the trader would be on the hook to buy shares if they fall below the $40 level. (See our Education section)

QCOR fell 1.79 percent yesterday to close at $51.69. The drug developer has continued to decline since gapping down from the $70 level after its last earnings report on Oct. 29, when the company disclosed that more regulators were joining an ongoing investigation into its marketing practices.

Management is scheduled to present at the Oppenheimer 24th Annual Healthcare Conference in New York tomorrow. Total option volume in the name was just shy of 20,000 contracts yesterday, more than quadruple its daily average for the last month. 
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Market Level Making You Nervous, Huh? Part 3

In last week's article, we discussed how important the extra cash you save by using the Stock Replacement Strategy over buying the actual stock is! That extra cash in our account instead of being unnecessarily tied up in a stock position allows us to buy the puts we would need to protect our downside in the case of a major sell-off.

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