Novartis enjoyed a pop after the Federal Reserve's announcement
yesterday, and the bears wasted no time in pouncing on its options.
NVS followed other stocks higher after the central bank said it
would buy more government debt. The Swiss drug maker topped out at
$51.44, slightly below a level where the shares peaked in mid-July.
optionMONSTER's Depth Charge system showed heavy activity at the
September 50 puts within a few minutes of NVS reversing from that
level. Buyers initially paid $0.90, but premiums then rose to $1 as
the shares pushed lower. By the end of the session, 11,243
contracts had traded, about 180 times open interest in the strike.
NVS ended the session with a 1.47 percent gain at $51.22. The
shares fell sharply after breaking an uptrend in early April and
now are attempting to regain their footing.
The stock had spiked as high as $51.62 on July 15 after management
raised its full-year forecast amid strong sales of branded and
generic drugs, but the shares were unable to hold the gains.
Yesterday's put buying may have been an outright bearish play or
the work of new shareholders who had bought the stock and wanted
The trades dominated option activity in NVS and pushed total volume
to 12 times greater than average. Puts outnumbered calls by a
37-to-1 ratio, according to the Depth Charge.
(Chart courtesy of tradeMONSTER)
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.