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Why trader is selling puts in Infinity

Chris McKhann (chris.mckhann@optionmonster.com)

Shares of Infinity Pharmaceuticals are falling despite today's market rally, but one trader sees limited downside from here.

optionMONSTER systems show that a trader sold 3,475 August 14 puts for $0.32. The volume was more than 10 times the strike's open interest before the session began, so this is a new position.

The put selling is a bet that INFI will remain above $14 through expiration in mid-August. If the stock is below that strike price, the trader will face the obligation to buy shares at that level. (See our Education section)

INFI is down 1.25 percent to $16.61 today. The drug developer was above $50 in early April but at a 10-month low of $15.45 on Monday. The stock hasn't been below $14 in just over a year.

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