Affymax has been wavering after a rally, and one investor
optionMONSTER's Depth Charge monitoring program detected the
purchase of 2,737 January 15 puts for $2.15 and the sale of an
equal number of October 12 puts for $0.50. Volume was below open
interest in the October options, indicating that an existing
position was rolled from one contract to the other.
The investor probably owns shares in the drug developer and is
using the puts as a
. Adjusting the trade cost him or her $1.65 and provides an
additional three months of downside protection. It also raised by
$3 the level at which the trader has insurance. (See our
AFFY fell 1.81 percent to $16.23 yesterday but is up 25 percent in
the last month. Most of that move occurred after the company
announced a contract to distribute its anemia drug. Since then the
shares have been drifting sideways, which could be making some
traders worry that a pullback is next.
Another consideration in the put roll is that the October contracts
they previously owned will lose value at quicker pace than the
January options because they have less time until expiration, so
unloading them sooner rather than later made sense. While bearish
on the surface, the trade is actually bullish because it reflects a
willingness to own AFFY over the longer term in the hope that it
will keep rallying.
Overall option volume was 9 times greater than average yesterday,
with puts outnumbering calls by more than 100 to 1.
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