Allergan attempted to rally against a short-term downtrend,
prompting one trader to bet against the stock Friday.
optionMONSTER's tracking systems detected the sale of 2,100 May 65
calls for $0.85 and the purchase of an equal number of May 70 calls
for $0.15, producing a credit of $0.70. Volume was more than twice
open interest in both strikes.
AGN rose 2.76 percent to $63.69 on Friday after reporting
better-than-expected sales and earnings and forecasting slightly
bullish results for the next quarter. The maker of Botox has been
drifting lower since hitting a two-year high at the end of March,
and it entered the session down about 5 percent for the month.
The so-called bearish call spread is designed to profit from the
downward momentum, letting the investor keep the credit if AGN
remains below $65 through expiration. He or she then bought the
upside calls to limit their maximum potential loss at $5 if the
stock moves against them.
The trade appeared after the shares pulled back from over $64,
confirming a resistance line between the April 1 and April 20
The transaction pushed overall options volume in AGN to eight times
greater than average.
(Chart courtesy of tradeMONSTER)
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