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Will time heal a wound from Arena?

David Russell (david.russell@optionmonster.com)

One investor is hoping that time will heal a wound inflicted by Arena Pharmaceuticals.

optionMONSTER's tracking systems detected the sale of 5,000 January 8 puts in the maker of obesity drugs for $2.28. An equal number of August 9 puts were bought at the same time for $2.23, but volume was below open interest in those.

ARNA rose 1.01 percent to $6.94 on Friday, so those puts are in the money . That suggests the investor sold the August 9s at some point in the past, looking for shares to hold their ground. But then they fell below the strike price, putting the trader at risk of being assigned shares on expiration two weeks from now.

Adjusting the position gives them more time for a rebound. It also lowered the price at which they must get long, and yielded a credit of $0.05. If the stock rebounds over $8 by January expiration, the contracts will expire worthless. (See our Education section for more on selling puts .)

Total option volume was almost triple the daily average in the session.

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