Rockwell Medical trade sees floor
Rockwell Medical fell sharply yesterday, but one large trader apparently believes that further losses will be limited.
optionMONSTER's tracking systems found that 3,550 December 8 puts were sold in one print for $0.35 yesterday. This is clearly a new position, as open interestin the strike was a mere 14 contracts before the trade occurred.
The put seller collects the $0.35 premium and is looking for RMTI stay above $8 through expiration in mid-December. If the stock falls below that strike price, these put sellers 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 Coaching section)
RMTI fell 8.09 percent to $10.54 yesterday but is still up more than 27 percent in the last month. The biopharmaceutical company rose sharply in October on optimism over its Triferic iron-replacement drug, but shares fell after quarterly results missed estimates after Monday's close.
Yesterday's put sale accounted for 80 percent of the option volume in RMTI, which was more than 6 times its daily average for the last month.
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