Options Trading News

April 11, 2013  Thu 3:18 AM CT

Ariad Pharmaceuticals has been rebounding in recent days, and one trader is betting on a floor beneath the drug developer's stock.

optionMONSTER systems detected the sale of 3,000 May 15 puts for the bid price of $0.25 yesterday. The volume was more than 10 times the strike's open interest before the session began, clearly showing that this is a new position.

The put seller is betting that ARIA will remain above $15 through expiration in mid-May. But if the stock falls below that strike price, he or she will face the obligation to buy shares at that level.
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ARIA gained 3.9 percent yesterday to close at $18.13 after bouncing off support around $16.30 last week, its lowest levels since last June. The stock was above $22 a month ago and hasn't been below $15 since last April.
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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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