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Trader sees ceiling for Novartis

Chris McKhann (chris.mckhann@optionmonster.com)

A trader sees recent highs as overhead resistance for Novartis.

optionMONSTER systems show that 5,687 NVS options have traded, compared to the daily average of 477 over the last month. Dominating the action is one print in the January 77.50 calls, where 5,000 contracts were sold for the bid price of $0.95. The volume was 4 times the previous open interest, so this is clearly a new position.

The call selling isn't tied to any trading in the underlying shares identified by our systems today. The options could have been sold naked with an initial bearish bias, but they are more likely tied to an existing long stock position in a covered-call strategy . That would be bullish up to the $77.50 strike price but give up any gains above it. (See our Education section)

NVS is down fractionally at $73.77 but off the worst levels of the morning. The pharmaceutical company reached an all-time high of $77.10 three weeks ago.

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