One investor is getting long Momenta Pharmaceuticals months
after the drug maker won a key patent case.
optionMONSTER's Heat Seeker monitoring system detected the purchase
of 2,180 March 17 calls for $1.45 and the sale of an equal number
of March 12 puts for $0.45 yesterday. Volume was more than 20 times
open interest at each strike, indicating that new positions were
generates income and obligates the investor to buy shares if they
locks in the price where the stock can be purchased. Both
strategies will profit from a rally and will lose money from a
drop. Combining them results in a position similar to owning
shares, but at a much lower cost.
MNTA gained 4.31 percent to $15.01 yesterday. It rallied in July
after a court overturned Teva Pharmaceutical's patent on the
multiple-sclerosis drug Copaxone but has been pulling back since.
Momenta wants to introduce a generic version of the product as
early as May 2014.
Yesterday's option strategy cost $1 and locks in a purchase price
of $18 for the shares through early next year. That's the same
price where MNTA peaked after the court ruling, so the strategy
ensures that the investor won't miss a rally above that level.
The move is unusual because the trader sold shorter-dated puts,
which reduces risk over the longer term. (See our
for more ways that options can be combined to match your trading
More than 6,200 contracts changed hands in the session, according
to the Heat Seeker. It was almost 25 times the average amount.
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