Questcor Pharmaceuticals has been struggling all year, and one
investor is still worried.
optionMONSTER's Depth Charge tracking system detected the purchase
of about 5,000 April 35 puts for $2.34. An equal number of March 35
puts were sold at the same time for $0.84, but volume was below
This suggests that an existing position was closed in the March
contracts and rolled forward to April. The trade gives the investor
an extra month of downside protection on the high-flying drug maker
at an incremental cost of $1.50.
He or she is probably using the puts to
hedge a long position
in the equity. By adjusting it now, the trader avoided the
quickening pace of
that will occur into expiration at the end of next week. (See our
QCOR is trading at $36.10, down 5.22 percent this afternoon and 14
percent this year. That weakness has come despite a strong earnings
report on Feb. 22 and a rally of almost 200 percent in 2011.
Overall option volume is almost quadruple the daily average so far
today, according to the Depth Charge. Puts have accounted for more
than 80 percent of the activity.
The stock was also the target of a
earlier in the week.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.