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• ONXX 67% Rate It

Onyx Pharmaceuticals has investors on edge, but one trader apparently thinks that the market is too excited.

The Food and Drug Administration's advisory is expected to issue a decision on the company's carfilzomib cancer drug on June 20, which could trigger a big move in the share price. That has driven implied volatility up to 69 percent from just 42 percent less than two weeks ago. Option premiums have risen in the process.

Today an investor is taking the other side of the trade by selling 2,500 contracts each in the July 42 calls and the July 42 puts. The trader earned $4.10 and $3.70 respectively, which translates into a total credit of $7.80.

The investor will keep that credit as profit if the stock closes at $42 on expiration. Gains will erode on either side of that level, but the position will make money anywhere between $34.20 and $49.80.

Known as a short straddle , the trade is an example of a market-neutral strategy that earns money from the passage of time rather than a directional move. (See our Education section)

ONXX is up 4.48 percent to $43.57 in afternoon trading. Total option volume in the name is more than twice its average amount so far today.

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