Express Scripts got smacked down after an early pop on Friday, and one investor apparently believes that the pharmacy-benefits company will remain stuck into the autumn.
optionMONSTER's tracking systems detected the sale of 2,000 November 60 puts for $4.56 and 2,000 November 60 calls for $3.70. Known as a short straddle, the trade generated $8.26 of income.
The investor will get to keep the credit if ESRX closes at $60 on expiration. Profits will erode on either side of that level and turn to losses below $51.74 and above $68.26. (See our Education section)
The stock hit an all-time high of $60.89 early in the session after management announced an accelerated stock buyback. But then the sellers came out and drove shares lower in heavy volume. ESRX ended the session down 1.76 percent at $58.48.
The company is in the midst of a long-term run and has rallied steadily for almost 20 years. The industry has benefited by channeling patients into generic medicines, which helps health insurers cut expenses. Business is expected to remain strong this year as major drugs including Lipitor go off patent.
Overall option volume in ESRX was 5 times greater than average on Friday.
There was also protective put buying during the session in McKesson, another pharmacy-benefits provider.
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