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Bearish play in Monster Beverage

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Monster Beverage has bounced back from a sharp fall earlier this month, but one trader is positioning for a return to multi-month lows.

optionMONSTER's Depth Charge system detected the sale of 2,500 January 45 puts for $0.05 and the purchase of 2,500 March 45 puts for $0.60 on Wednesday. Volume was below previous open interest in the nearer strike but below it in the longer-dated contracts, indicating that a position was being rolled forward.

The trader is paying a net $0.55 to extend the position for another two months and is now looking for MSNT to plunge more than 25 percent by mid-March. Because the puts are so far out of the money , the trade suggests an outright bearish play rather than a hedge on a long position. The stock last traded near the $45 level eight months ago. (See our Education section)

MNST rose 1.79 percent on Wednesday to close at $59.85, a day after RBC Capital Markets initiated coverage of the name with an "outperform" rating. Shares of the energy-drink company dropped after disappointing third-quarter results on Nov. 7 but have since recovered all those losses, rallying back above their 100-day moving average in the last two sessions.

Total option volume in the name topped 12,300 contracts on Wednesday, 8 times its daily average for the last month. Overall puts outnumbered calls by more than 5 to 1. 

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