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Biotechnology company Life Technologies Corp. (LIFE - 43.34) has attracted some fairly aggressive bears today. The result is put volume that is 57 times an average day! The majority of this volume was centered on the out-of-the-money August 40 strike.
Just over 3,000 contracts have traded at this strike, which came into the session with open interest of only 302 contracts. A group of four block trades – together adding up to 2,189 contracts – crossed the tape within the first 90 minutes of trading. Approximately 93% of all trades at this back-month strike went off at the ask price, signifying they are being initiated on the buy side. The average price per contract is an even $1.00 and implied volatility has risen 2% for the option.
This long put suggests these put buyers expect LIFE to stumble south of the $40 strike by mid-August. Losses are capped at 100% of the premium paid, while gains begin to accrue south of the breakeven price ($39) and continue to build as the shares fall.
Year-over-year, LIFE shares have dropped roughly 18%, though they have been able to gain more than 10% in 2012 so far. In the past month, the stock has managed to keep pace with the S&P 500 Index (SPX) but has underperformed the broad-market index by roughly eight percentage points in the past three months.