Shares of Allscripts Healthcare have gained more than 40 percent in the last three months, but one trader is positioning for the possibility of a near-term pullback.
optionMONSTER's Depth Charge system detected the purchase of 3,000 November 12 puts at the same second on Friday for $0.50. The volume was nearly 10 times the strike's open interest of 319 contracts at the start of the session, clearly indicating new activity.
The put buying, which was not tied to any stock trades identified by our systems on Friday, could be a straight bearish bet or a protective hedge on a long position established earlier. In either case, these long puts will be profitable if the stock falls more than 12.6 percent by expiration at the end of next week. Traders had purchased November 13 puts last month. (See our Education section)
MDRX fell 3.77 percent on Friday to close at $13.16, just below its 200-day moving average. The health-care IT company gapped higher after raising guidance in its last earnings report in early August and jumped again in late September on reported discussions about a possible acquisition by Blackstone.
The company will report third-quarter results on Thursday after the close. Allscripts is also scheduled to make presentations at two industry events this month, the Credit Suisse Healthcare Conference on Nov. 14 and the Piper Jaffray Healthcare Conference on Nov. 27.
The put buying made up almost all the volume in the name on Friday, which was double its daily average. Only 61 calls changed hands in all strikes, a reflection of the day's bearish sentiment.
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