Options Trading News

December 26, 2012  Wed 9:55 AM CT

Questcor Pharmaceuticals has been trying to recover since seeing its stock price nearly halved in September, but traders are positioning for another leg lower in the next month.

optionMONSTER shows that 1,648 January 27 puts have traded in a strong buying pattern today, with premiums rising from $0.80 to $1.05 in less than 15 minutes. The volume was more than triple the open interest of 502 contracts in the strike at the beginning of the day, indicating that these are new positions.

QCOR, which is down 0.46 percent to $29.90 this morning, has run into resistance at the $30 level in recent days. The stock plummeted from above $50 to close at $26.35 on Sept. 19 after negative reports about its Acthar multiple-sclerosis drug.

The put buying isn't tied to an stock trades identified by our systems today, though it could have been done to protect a long position established earlier. Alternatively, the options could be making a straight bearish bet that QCOR will fall at least 12 percent or 13 percent by expiration on Jan. 18. (See our Education section)

Total option volume in the name is already almost 4 times its average full-session volume for the last month. Puts are outpacing calls by more than 5 to 1 so far.
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I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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