Options Trading News

June 7, 2013  Fri 11:37 AM CT

A trader is counting on a floor beneath shares of Ariad Pharmaceuticals as the stock rebounds today.

optionMONSTER's detected the sale of 3,000 July 15 puts in one print for $0.20. This is clearly a new position, as open interest in the strike was a mere 38 contracts before the trade appeared.

The put seller is betting that ARIA will stay above the $15 strike price through expiration in mid-July. If the stock falls below that level, the trader will be on the hook to buy shares at an effective price of $14.80 once the the $0.20 credit from the put sale is factored in. (See our Education section)

ARIA is up 5.81 percent to $18.30 in afternoon trading, breaking back above its 50-day moving average. The drug developer's shares fell sharply after hitting resistance at the $20 level last week but then bounced hard off support around $16.50 and have been running higher since.

Total option volume in the name has already topped 5,200 contracts, well above its full-session average of 3,105 in the last month.

The company is scheduled to present at two industry events on Tuesday, the William Blair Growth Stock Conference and the Goldman Sachs Healthcare Conference.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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