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Downside strategy in Boston Scientific

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A trader is apparently positioning for a potential drop in Boston Scientific after it reports earnings next week.

optionMONSTER's Depth Charge system detected the sale of 5,000 April 8 puts for $0.83 and the purchase of 5,000 May 8 puts for $0.90. Volume was below open interest in the nearer-dated strike but above it in the May contracts.

This indicates that an investor is rolling a long-put position forward for a net $0.07 to stay in the trade for another month. These options are looking for BSX to stay below $8 through mid-May, after the company announces first-quarter results in the pre-market on Thursday, April 25 .
Puts lock in the price where traders can sell the stock regardless of how far it might fall. In this case the trader could have bought the contracts as a hedge on a long position or as a straight bet that the stock will drop. (See our Education section)

BSX is up 1.97 percent to $7.23 this morning. The medical-device manufacturer had been falling steadily for more than a week, breaking below its 50-day moving average, but may have found support at current levels.

Total option volume in the name has already exceeded 10,000 contracts, nearly quadruple its full-session average for the last month. Only 68 calls have traded in the session, a reflection of the day's bearish sentiment so far.

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