OptionsHouse

Options Trading News

May 23, 2013  Thu 2:45 AM CT

ARIA: SEE CHART GET CHAIN FIND STRATEGIES
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


OptionsHouse

Premium Services

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »