Credit: Shutterstock photoTeva Pharmaceutical Industries issued a weak quarterly report yesterday, and now the bears want to savage the Israeli drug maker.
optionMONSTER's Depth Charge monitoring system detected the purchase of almost 2,500 August 42.50 puts for $3.80 and $3.85. Volume was almost quadruple open interest at the strike.
Puts lock in the price where shares can be sold, so they move in the opposite direction as the stock price. Today's contracts are in the money, giving them an especially strong inverse correlation. (See our Education section for more on how to place downside bets without the risks of short selling.)
TEVA is off 1.26 percent to $39.93 in morning trading and down 4 percent in the last week. The company has been lagging other drug makers, thwarted by weak revenue growth and looming patent expiration for its Copaxone multiple-sclerosis drug next year.
It's been trending lower since early 2010 while making consistently lower highs, and today's option action is looking for another push to the downside.
Puts outnumber calls by more than 2 to 1 in TEVA so far today, according to the Depth Charge.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
