One trader apparently thinks that United Therapeutics is going
nowhere in a hurry.
optionMONSTER's tracking systems detected the purchase of 2,000
November 47.50 calls for $3.85 and the sale of an equal number of
August 47.50 calls for $2.60. Volume was more than 6 times open
interest in both strikes.
Known as a
, the strategy is designed to exploit the different rates of
at the two expiration months. The August contracts will lose their
worth more quickly than the Novembers, expanding the value of the
spread from the initial $1.25 paid to open it.
Investors can also stay in the trade in hope that the stock rallies
above $47.50 following August expiration. If it rallies before
then, they will lose the $1.25.
The calendar spread pushed total option volume in UTHR to almost 8
times greater than average in yesterday's session. (See our
UTHR rose 0.09 percent to $43.73 yesterday and has shed one-third
of its value in the last year.
The drug maker reported strong earnings in the second half of 2011
but missed estimates on the top and bottom lines the last time
results came out on Feb. 14. Already stuck at their 200-day moving
average, the shares gapped downward on the news and have been
trending lower since.
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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