Put sale bets on floor in Illumina
Illumina has dropped more than 25 percent since its last quarterly report in July, but traders are betting that further downside will be limited.
optionMONSTER's tracking systems show that 9,119 October 160 puts were sold for $2.60 at the same second on Friday. This is clearly a new position, as open interest in the strike was a mere 22 contracts before the trade occurred.
The put seller collects the $2.60 premium and is looking for ILMN to stay above $160 through expiration in mid-October. If the stock falls below that strike price, the trader will be on the hook to buy shares at that level. Investors sometimes sell puts this way in hopes of picking up a stock at an effective discount to existing levels. (See our Education section)
ILMN fell 6.77 percent to $175.54 on Friday and is down 14 percent in the last three months. The genetic-analysis company gapped down from above $237 after revenues missed expectations on July 21 and got slammed again with the recent downturn in the biopharmaceutical space. The next results are expected to come out after the October puts expire.
Overall option volume in the name topped 14,000 on Friday, 24 times its daily average for the last month. The October put sale made up 65 percent of the total.
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