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April 11, 2013  Thu 3:18 AM CT

ARIA: SEE CHART GET CHAIN FIND STRATEGIES
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.
(See our Education section)

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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Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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