Danaher is trying to rally, but one investor is totally bearish.
optionMONSTER's Depth Charge tracking system detected the purchase
of 1,500 July 52.50 puts for $2.72 and the sale of an equal number
of July 45 calls for $0.47. Volume was more than 30 times open
interest at both strikes.
Known as a
, the strategy is a common way to leverage downside in a stock's
price. The unusual aspect of yesterday's trade is that the July
52.50 contracts were in the money, which increases cost but also
makes it easier to profit.
He or she paid $2.25, and will make money if the
diversified-manufacturing company closes anywhere below $50.25 on
expiration. A maximum profit of 233 percent will occur at $45. (See
DHR gained 2.01 percent to $51.32 yesterday. It hit an all-time
high of $56.45 at the start of April but has been drifting lower
since. The shares bounced at $50 earlier this week, but yesterday's
trader apparently thinks that they will roll over soon and continue
Overall option volume was more than triple the daily average, with
puts accounting for more than four-fifths of the total.
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