Theravance exploded higher last week, and one trader is collaring the name.
optionMONSTER's Depth Charge monitoring program detected the purchase of 2,000 January 20 puts for $1.35 and the sale of an equal number of January 30 calls for $0.50, resulting in a cost of $0.85.
Known as a collar , the strategy is commonly used by investors who own a stock and want to protect against a potential drop. In the case of today's transaction, the trader has essentially agreed to accept a maximum selling price of $30 on the shares while locking in protection at $20.
Given the premium expended, that translates into $29.50 on the upside and $19.50 on the downside. (See our Education section)
THRX is trading 2.26 percent higher to $23.96 this afternoon, up from about $20 last Monday. The drug developer has spent most of the last year fluctuating sharply between about $16 and $28.
The collar trade pushed total options in the name to 15 times greater than average so far today, according to the Depth Charge.
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