AstraZeneca ripped higher yesterday after winning a court
decision, and today investors are betting that it will hold those
optionMONSTER's tracking systems detected the sale of about 19,000
August 40 puts on the British drug maker against open interest of
just 605 contracts. Most of the large blocks priced for $0.40,
though premiums overall declined from $0.50 to $0.35 as the session
progressed--evidence of a selling pattern.
AZN fell 2.20 percent to $47.67 in early afternoon trading. The
shares rallied 9 percent yesterday after a judge upheld the
validity of the firm's Crestor cholesterol drug against a challenge
by companies including Novartis and Teva Pharmaceutical Industries.
Selling puts lets investors earn income in return for betting that
that AZN will remain above $40 through expiration. He or she may
consider it a low risk-strategy because the stock has traded well
above that level since June 2009.
The company raised its guidance the last time it reported earnings
on April 29, but investors are worried about it losing products as
patent expire in coming years. The next release is scheduled for
Today's put selling pushed total options volume in AZN to nine
times greater than average.
(Chart courtesy of tradeMONSTER)
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