Alexza Pharmaceuticals has been weak for years, and the bears
apparently believe that it might take another hit.
optionMONSTER's Depth Charge monitoring program detected the
purchase of 14,850 April 4.50 puts for an average premium of $0.64.
A matching number of April 3.50 puts was sold for $0.13, resulting
in a net cost of $0.51.
Known as a
bearish put spread
, the position will expand to $1 in value if ALXA closes at $3.50
on expiration. That would be a profit of 96 percent based on the
opening cost. Alternatively, the trader may be rolling an existing
trade from the 3.50s to the 4.50s, increasing leverage to the
downside in the share price.
Regardless, the activity reflects a belief that the stock is
vulnerable to a drop in the next three weeks. (See our
ALXA is down 1.142 percent to $4.35 in afternoon trading. It was
valued above $30 in 2010 but then gapped lower after the Food and
Drug Administration rejected its schizophrenia drug. The company
later obtained approval for a narrower set of uses.
Total option volume is 10 times greater than average in the name so
far today, according to the Depth Charge. Puts outnumber calls by a
bearish 169-to-1 ratio.
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