Why trader is selling puts in Actavis
Mike Yamamoto | [email protected]
optionMONSTER's tracking systems detected the sale of 3,100 August 110 puts in one print for $1 this morning. This is clearly a new position, as open interest in the strike was just 263 contracts before the trade appeared.
The put seller will keep the $1 credit as profit if ACT is above $110 at expiration in mid-August. If the stock is below that strike price, the trader will be on the hook to buy shares at that level. (See our Education section)
ACT is up fractionally this morning at $125.67. The stock spiked up from below $107 on May 10, the day of its annual shareholder meeting, and has been trading in an increasingly tight range since. The drug developer is scheduled to report second-quarter results on July 25.
Today's put sale has dominated the total option volume in the name so far today, which is already more than triple its daily average for the last month.