MannKind Corporation (MNKD) Trader Rolls the Dice On a Steeper Slide

One MannKind Corporation speculator rolled her bearish bet down and out

by Karee Venema

Published on Nov 12, 2014 at 10:21 AM
Updated on Apr 20, 2015 at 5:32 PM

MannKind Corporation (NASDAQ:MNKD) puts traded at 12 times the daily average on Tuesday, and outpaced calls by a more than 3-to-1 margin. The majority of the action occurred as one trader readjusted her bearish bet, calling for more downside on the struggling stock over the next several months.

Specifically, the security's November 9 and January 2015 8-strike puts saw the most action, with a collective 46,030 contracts on the tape by the close. The glut of this volume was a result of several large blocks of the former going off near the bid price -- signaling seller-driven activity -- and the latter trading at or near the ask price, suggesting they were bought. Open interest dropped at the higher-strike put and rose at the lower-strike put, indicating the closing and opening of positions, respectively.

By rolling her long put position down and out, this speculator is expressing the belief that MNKD will extend its recent slide through January 2015 options expiration. Delta on the January 2015 8-strike put is currently docked at negative 0.68, pointing to a 68% probability the option will be in the money at the close on Friday, Jan. 16 -- when the series expires.

As noted, MannKind Corporation (NASDAQ:MNKD) has had a rough go of it on the charts in recent months, and outside of a few rare moves to the upside, has surrendered almost half its value since hitting a four-year peak of $11.48 in late June. The equity is paring a portion of these losses today, up 0.7% to trade at $6.08.

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