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Sigma-Aldrich draws rare put activity

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Sigma-Aldrich gapped lower after reporting earnings earlier this week, but one trader apparently believes that the slide will end within a month.

The chemical company usually sees hardly any option activity, with total volume averaging only 194 contracts a day. But 2,792 contracts traded in the name yesterday, and almost all of that volume was in a single print.

optionMONSTER's Depth Charge system detected the sale of 2,500 August 65 puts for $0.90. Open interest in the strike was just 340 contracts at the start of the session, so this is clearly a new position.

The put seller is betting that SIAL will be above that $65 strike price when the options expire on Aug. 17. If the stock is below that level at expiration, the trader runs the risk of having to buy the shares. (See our Education section)

SIAL fell 1.22 percent yesterday to close at $67.27 and is sitting just below support levels that go back to late January. Shares were trading near $73 only a week ago and were over $70 going into the company's second-quarter release on Tuesday, which ended with the stock closing below its 200-day moving average.

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