Infinity Pharma draws unusual spread

optionMONSTER

A complex put spread is targeting Infinity Pharmaceuticals as it climbs to eight-year highs.

INFI is up 8.5 percent to $20.96. That is the highest since the latter part of 2004. The drug company's shares have climbed more than 200 percent from support levels around $6 that were tested throughout February.

More than 4,300 INFI options trade today, compared to a daily average of roughly 1,400 in the last month. optionMONSTER's Depth Charge systems shows that a trader bought 1,000 October 20 puts for $1.05 and sold 2,000 September 20 puts for $0.35.

Minutes later another 1,000 October 20 puts were bought for the same price. The previous open interest at each strike was fewer than 100, so this is new positioning.

This calendar spread takes a maximum profit if INFI remains around $20 through expiration at the end of next week. Losses are limited but can occur if shares move too far in either direction.

Calendar spreads are designed as range-bound trades that take advantage of the faster time decay of nearer-term options. (See our Education section)

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