Why trader is selling puts in Halozyme


Shares of Halozyme Therapeutics have been in a tight range in the last few weeks, and one trader apparently expects that to continue.

The trade in HALO is entirely in 2,000 October 5 puts, which compares with open interest of just 86 contracts at that strike and a daily average of 480 in total option volume. The price slipped lower as the options sold, with 22 going for $0.23, 40 for $0.22, and 1,938 for $0.21 all at the same second.

This put selling is a bet that HALO will hold above that $5 strike price in coming weeks. The trader is willing to buy the stock if it drops back below that level but doesn't see huge upside either. (See our Education section)

HALO trades at $5.91, up fractionally on the day. The biopharmaceutical company is has been bouncing below this resistance level at $6 since the start of August, when shares gapped below $4 from above $9 on earnings news. It recovered to $6 and has been unable to break higher since, though it did see bullish option activity last week.

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