As Savient Pharmaceuticals hovered near all-time lows yesterday, heavy put trading was looking for even more downside in the stock.
SVNT finished the day down 11 percent, or $0.06, to $0.51. The drug developer hit a lifetime low of $0.48 on Tuesday. Shares were trading above $8 a year ago and over $22 in October 2010.
Total option volume in the name topped 44,000 contracts, dwarfing its daily average of 2,500. All but 200 of them were calls, and our systems show that a three-way spread dominated the action.
First a block of 8,000 July 2 puts was sold for $1.44 against open interest of more than 38,000. At the same time, 12,000 August 1 puts were bought for $0.61 against open interest of just 505.
More than two hours later, a second block of 8,000 July 2 puts was sold for $1.47 while 8,000 more August 2 puts were bought for the ask price of $1.62.
With the July puts expiring at the end of today's session, it appears that this trader is rolling those options out to the August 1 and 2 contracts. The trader end ups with positions at both strikes, increasing the size of the downside bet without spending more to do so.
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