Why trader is selling puts in Infinity

optionMONSTER

Infinity Pharmaceuticals has pulled back from 12-year highs, but one trader apparently believes that any further downside will be limited.

optionMONSTER systems show that a trader sold 3,000 May 35 puts for $0.80 and another 1,000 for the bid price of $0.75. These are clearly new positions, as open interest in the strike was just 1,125 contracts before the session began.

The put selling is a bet that INFI will hold above $35 through mid-May. If it falls below that strike price, the trader faces the risk of having to buy shares at that level. (See our Education section)

INFI is up fractionally at $42.56 after dipping as low as $40.78 this morning. Shares were above $50 just last week, posting their highest close since 2000.

More than 7,600 INFI options have changed hands so far, about triple its daily average.


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