One investor is hedging a position in Ironwood Pharmaceuticals
before a regulatory ruling next month.
optionMONSTER's Depth Charge monitoring system detected the
purchase of 1,200 September 10 puts for $0.60 and the sale of an
equal number of September 15 calls for $0.45. Volume exceeded
open interest at both strikes, indicating that a new position was
The trade cost $0.15 and will make money if the drug developer
drops toward $10 in the near term. It also obligates the investor
to sell shares for $15 if they go that high, so he or she is
probably owns the shares.
IRWD rose 1.68 percent to $12.71 yesterday, and has been
fluctuating in a range for the last year. The Food & Drug
Administration is expected to approve or reject the company's
linaclotide intestinal drug in September. The decision could
significantly move the stock, which explains why investors are
The trade pushed overall option volume in the name to 23 times
greater than average.
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