InVentiv Health is up 49 percent in the last month on takeover speculation, and now investors are positioning for a drop.
OptionMonster's tracking systemsThursday detected heavy buying of the July 20 puts, which traded 3,342 times for $0.50 to $0.60. Volume was more than four times exiting open interest in the strike.
InVentiv rose 1.65 percent to $22.83 on Thursday. The provider of services to drug companies has been ripping higher since March 26, when news reports said Goldman Sachs was helping it find a buyer. Management confirmed that it was in takeover talks the following session.
- Options Tips from Jon Najarian
- Read The CNBC Stock Blog
- Options Tips from Pete Najarian
The shares have moved straight up to about same level that served as support and then resistance in July and August 2008. Some chart watchers may expect a pullback in coming sessions if a takeover doesn't materialize.
The stock must fall at least 15 percent by expiration for Thursday's puts to turn a profit.
The trade may have also been implemented by an investor who got long waiting for a higher takeover price but also wants protection against the stock collapsing back to its previous levels.
The activity pushed overall options volume in the name to nine times greater than average. Puts accounted for 80 percent of the activity.
InVentiv Competes With:
Cross Country Healthcare
Options Trading School:
David Russell is a reporter and writer for OptionMonster.