Credit: Shutterstock photoONYX Pharmaceuticals is stumbling, and one investor is bracing for a plunge.
optionMONSTER's Depth Charge tracking program detected the purchase of about 7,000 August 30 puts, most of which priced for $1.20. Roughly the same number of August 32 calls were sold at the same time for $0.70. Volume was more than 19 times open interest in both strikes.
The trade cost about $0.50 and will simulate a short position in the company, which jointly markets Nexavar as a treatment for kidney and liver cancer with Bayer. After the close, it reported earnings and revenue that missed analysts' forecasts.
ONXX fell 3.71 percent to $30.37 in the regular session and pushed slightly lower in extended trading. It's down 30 percent since mid-May.
Yesterday's option trade may have been the work of an investor looking to hedge a long position in the stock, in which case he or she would be forced to sell ONXX for $32 on a rebound to that level. They'd also be protected anywhere below $29.50. (See our Education section)
Overall option volume in the session was 12 times greater than average, according to the Depth Charge.
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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.
