Edwards Lifesciences cratered yesterday, but one investor took a
leap of faith.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 2,000 January 70 calls for $4.82, while equal-sized
blocks were sold in the January 60 puts for $4.68 and the January
85 calls for $1.34. Volume was more than 8 times open interest at
all three strikes.
The strategy combines a
to pay the investor an initial credit of $1.20. He or she now
stands to collect an additional $15 if EW closes at or above $15 on
expiration early next year. Their main risk is to the downside,
with a drop below $60 driving 60 puts into the money. (See our
EW fell 22 percent to $64.60 yesterday after weak demand for its
Sapien heart valves forced management to lower guidance. The
product has been struggling to gain acceptance since its launch in
late 2011, and shares have lost more than one-quarter of their
value so far this year.
The drop brings EW back to levels where it bounced 16 months ago,
which could be leading some chart watchers to expect a bounce. It
only needs to reach its levels from mid-April for yesterday's
three-part strategy to inflate to full value.
Total option volume was 90 times greater than average in the
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