One investor wants to squeeze a few pennies out of Mylan,
betting that it will remain in a range.
optionMONSTER's tracking systems detected the sale of 12,000 April
22 puts for $0.42 and 12,000 April 23 calls for $0.06. Volume was
more than twice open interest at both strikes.
The strategy resulted in a credit of $0.50, which the investor will
get to keep if the drug maker closes between $22 and $23 on
expiration. Profits will erode outside of that range, turning to
losses below $21.50 and above $23.50.
Known as a
, the trade is designed to make money from the passage of time
rather than a directional move. It will benefit from the especially
fast pace of
that will occur in the April contracts as expiration approaches at
the end of next week. (See our
section for more)
MYL fell 2.7 percent to $21.98 yesterday. It peaked around $22 in
January and then bounced at that level in March, which could be
leading some chart watchers to believe that it will find support
there again. They might also think upside will be limited now that
the stock is below its 50-day moving average. Those considerations
could make them comfortable betting the current range will remain
in effect in the near term.
The short strangle pushed total option volume in the name to 17
times greater than average 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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