Targacept is up sharply since reporting earnings last week, and traders apparently expect the biopharmaceutical company to hold onto its gains.
optionMONSTER's tracking systems show that 5,510 July 5 puts were sold for $0.30 yesterday, including a single print of 5,000. These are clearly new positions, as open interest in the strike was a mere 15 contracts before the session began.
The put sellers are looking for TRGT to stay above the $5 strike price through expiration in mid-July. If it falls below that level, the traders will face the obligation to buy shares at an effective price of $4.70 once the $0.30 credit from the put sale is included. (See our Education section)
TRGT finished yesterday's session with a gain of 3.29 percent to $5.34, its highest close since March 2012, after reaching a new 52-week high of $5.40 in the morning. The name drew bullish option activity before its first-quarter report on May 7 and spiked higher after those results were released.
Total option volume in the name yesterday was 10 times its daily average.
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