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December 11, 2012  Tue 8:56 AM CT

PCYC: SEE CHART GET CHAIN FIND STRATEGIES
Pharmacyclics is rising today after test results on a key cancer drug, and one trader is betting against a collapse in the biopharmaceutical stock.

optionMONSTER's tracking systems detected the sale of 2,000 May 36 puts in one print for $1. Open interest in the strike was just 36 contracts at the start of the session, so this is a new position.

PCYC is up 2.89 percent to $60.50 this morning after popping at the open. The company today reported positive findings in its Phase II trial of its ibrutinib drug, a proposed oral treatment for a form of lymphoma.

The stock gapped down from above $61 at the beginning of November but has been climbing since then. It rose above its 50-day moving average yesterday and above its 100-day average today.

Today's put seller is betting that PCYC will hold above the $36 strike price through expiration in mid-May 2013. The trader faces the obligation to buy the shares if the stock is below that level, but at an effective price of $35 once the credit from the put sale is included. (See our Education section)
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Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  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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