Boston Scientific has been sick for years, and one investor apparently thinks that the condition might be terminal.
optionMONSTER's Depth Charge tracking system detected the purchase of 1,000 May 5 puts on the medical-device company for $0.21. An equal number of May 6 calls were sold at the same time for $0.27, resulting in a net credit of $0.06.
The position is leveraged to downside in the share price, making money on a drop below $5. It also faces potential losses over $6 because of the short calls, which will force selling in the stock goes above that level. (See our Education section)
BSX rose 2.69 percent to $5.73 on Monday. It peaked above $45 in 2004 before steadily falling to around $5 two years ago.
The shares have held their ground since then, while continuing to make lower highs. That could make some chart watchers nervous that the stock will break long-term support and probe new depths.
The option trade may have been the work of an investor who owns the stock and wants to protect that position by using a strategy known as a collar .
Some 5,000 contracts traded in the session, according to the Depth Charge. That was more than triple the daily average.
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