ViroPharma gets a bearish prescription
David Russell | email@example.com
optionMONSTER's Depth Charge monitoring system detected the purchase of 2,500 June 20 puts for $1.15 and the sale of an equal number of May 22.50 puts for $2.55. Volume was below open interest in the May options but not in the June contracts, which indicates that an existing trade was rolled from one strike to the other.
The trader collected a credit of $1.40 and now has an additional month to profit from downside in the stock price. He or she may be a speculative bear or a shareholder looking to hedge a long position.
VPHM fell 3.05 percent yesterday to close at $20.04. It almost doubled between September and March but then cratered after the Food and Drug Administration decided to allow a generic version of its Vanconin antibiotic. The drug accounts for about half its revenue.
A poor earnings report followed on May 1, as its other main product, Cinryze, generated less revenue than expected. (See researchLAB for more)
Yesterday's trade pushed total option volume in the name to triple its daily average, with puts outnumbering calls by a bearish 14 to 1.