Options Trading News

July 2, 2013  Tue 9:38 AM CT

A trader is looking for a floor in shares of pharmaceutical company Actavis ahead of its earnings report later this month.

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.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. 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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