One investor apparently thinks that Elan will remain trapped in
a range, even with earnings later in the month.
optionMONSTER's monitoring programs detected the sale of 20,000
October 13 puts for $2.30 and 20,000 October 16 calls for $2.05.
Volume exceeded open interest at both strikes, indicating that new
positions were initiated.
Known as a
, the trade resulted in a credit of $4.35 which the investor will
get to keep if the Irish drug maker remains between $13 and $16
through expiration. Gains erode outside of that range, turning to
losses below $8.65 and above $20.35.
The activity is especially noteworthy because earnings will be
released on July 25. Implied volatility has been surging higher
ahead of the results, but today's straddle seller is wagering that
the stock won't make a big move on the news. (See our
section for more on
strategies that make money from the
passage of time
rather than a directional move.)
ELN is down 0.22 percent to $13.80 in early afternoon trading and
has been grinding sideways all year. Overall option volume is 9
times greater than average so far in the session.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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