Why one trader is selling puts in Ariad

optionMONSTER

Ariad Pharmaceuticals is trying to break out of its recent range, and one trader is betting on a floor beneath the stock.

optionMONSTER's tracking systems detected the sale of 2,500 August 15 puts in one print for $0.33. This is clearly a new position, as open interest in the strike was a mere 38 contracts before the trade appeared.

The put seller is looking for ARIA to stay above the $15 strike price through mid-August. If it falls below that level, the trader will be on the hook to buy shares at an effective price of $14.67 once the $0.33 credit from the put sale is included. (See our Education section)

ARIA rose 5.13 percent to close at $18.43 yesterday, just above its 50-day moving average, after hitting a two-month high of $19.64 in the morning. The stock was above $22 in mid-March but fell sharply in the next several sessions and has been trading sideways since.

RBC Capital reiterated its "outperform" rating and $36 price target on Ariad yesterday. Total option volume in the name surpassed 11,700 contracts in the session, more than 11 times its daily average for the last month.

More From optionMONSTER

Rates

View Comments (0)