A large trader is hedging a bet in Isis Pharmaceuticals
following a blistering rally so far this year.
optionMONSTER's Depth Charge monitoring system detected the
purchase of 3,070 September 28 puts for $2.71. Equal-sized blocks
were sold in the September 25 puts for $1.30 and the September 34
calls for $1.06. Volume was more than 5 times the previous open
interest at all three strikes, indicating that new positions were
The trade cost $0.35 and will earn a maximum profit of 757 percent
if the drug maker closes at or below $25 on expiration. It also
forces the investor to sell shares if they go over $34, which
suggests he or she owns the stock and is using the strategy for
protection. The strategy combines elements of a
. (See our
section for other hedging techniques.)
ISIS fell 2.09 percent to $28.51 yesterday but has almost tripled
since the start of January. Most of that move came after regulators
approved its Kynamro cholesterol drug. The company also reported
strong earnings in February and gapped higher in June on strong
Phase II data of another compound.
Total option volume was 6 times greater than average in the
session, according to the Depth Charge.