Options Trading News

May 23, 2013  Thu 2:45 AM CT

Ariad Pharmaceuticals is trying to break out of its recent range, and one trader is betting on a floor beneath the stock.

optionMONSTER's tracking systems detected the sale of 2,500 August 15 puts in one print for $0.33. This is clearly a new position, as open interest in the strike was a mere 38 contracts before the trade appeared.

The put seller is looking for ARIA to stay above the $15 strike price through mid-August. If it falls below that level, the trader will be on the hook to buy shares at an effective price of $14.67 once the $0.33 credit from the put sale is included. (See our Education section)

ARIA rose 5.13 percent to close at $18.43 yesterday, just above its 50-day moving average, after hitting a two-month high of $19.64 in the morning. The stock was above $22 in mid-March but fell sharply in the next several sessions and has been trading sideways since.

RBC Capital reiterated its "outperform" rating and $36 price target on Ariad yesterday. Total option volume in the name surpassed 11,700 contracts in the session, more than 11 times its daily average for the last month.
Share this article with your friends



The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

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.

View more education articles »