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Markets

Bears chase Perrigo after big run

Perrigo is sputtering at an all-time high following a big run, and one trader is looking for a drop.

PRGO

optionMONSTER's Depth Charge tracking system detected the purchase of about 3,000 December 65 puts for $2.30 and $2.35 and the sale of a matching number of December 60 puts for $0.70 to $0.73. There was virtually no open interest in either strike.

The provider of over-the-counter drugs rose slightly to $66.91 in afternoon trading after reporting better-than-expected earnings and issuing strong guidance for the fiscal year.

At one point today the shares touched $68.38, their highest level ever. The stock has more than tripled since the stock market bottomed in March 2009, but gains have been slowing since April.

Today's option strategy, known as a put spread, is designed to leverage a push lower and may have been the work of a shareholder looking to hedge a long position in the stock. (See our Education section)

The spread cost about $1.60 to implement and will earn a maximum profit of about 212 percent if PRGO closes at or below $60 on expiration. The trade pushed total option volume in the stock to 11 times greater than average, with puts outnumbering calls by 19 to 1.

(Chart courtesy of tradeMONSTER)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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