Bearish combination targets Myriad

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One investor is nervous about Myriad Genetics as the stock continues to drift in a range.

optionMONSTER's Depth Charge tracking system detected the purchase of 1,000 November 21 puts for $0.57 and the sale of an equal number of November 28 calls for $0.62. Volume was more than 5 times open interest at both strikes.

The trader collected a credit of $0.05 and will make money if the drug maker closes below $21 on expiration. He or she will also be forced to sell shares for $28 if they go that high, although MYGN hasn't seen that price in almost three years.

They're probably using the options to protect a long position in the shares, a strategy known as a collar. It provides wide latitude for price swings, while guarding against a major collapse. See our Education Section for more ideas on how calls and puts can be used to manage risk.

MYGN rose 1.05 percent to $24.99 in late morning trading. It's moving sideways between about $22 and $26.50 all year.

The collar trade pushed total option volume in the stock to almost triple the daily average.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: MYGN

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