Array gets a big vote of confidence

Chris McKhann (

Array BioPharma shares have been tumbling this week, but one trader apparently believes that further losses will be limited.

More than 16,000 ARRY options changed hands yesterday, compared to a daily average of just 359 in the last month. Virtually all of the volume was in one trade.

optionMONSTER systems detected the purchase of 8,000 December 5 puts for $0.35 and the sale of 8,000 March 5 puts for $0.85. Volume was below previous open interest in the December contracts but above it in the March strike.

This could be a short calendar spread , but it is far more likely that the trader is rolling a short put position forward by three months to get more time for the strategy to work. He or she is now betting that ARRY will stay above $4.15 through expiration in mid-March. (See our Education section)

ARRY fell 4.52 percent to $4.86 yesterday, its lowest close since the beginning of July. The drug company came into the week at $6.

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