Biotech Values

[pcrutch]

MNTA – Momenta Pharmaceuticals, Inc. – Shares of the biotechnology company are currently down 1.00% to stand at $15.09 as of 10:50am in New York, but near-term put activity on the drug maker this morning indicates one strategist is positioning for the price of the underlying stock to collapse ahead of expiration day next month. Earlier this week, analysts at Goldman Sachs rated Momenta Pharmaceuticals at ‘neutral’ and assigned its shares a $15.00 price target. It looks like the pessimistic player initiated a debit put spread, buying 2,000 lots at the January 2011 $12.5 strike for a premium of $0.45 each, and selling the same number of puts at the lower January 2011 $7.5 strike at a premium of $0.10 apiece. Net premium paid for the spread amounts to $0.35 per contract. Thus, the options investor is poised to profit should shares in Momenta plummet 19.5% from the current price of $15.09 to breach the effective breakeven point on the spread at $12.15 ahead of expiration. Maximum potential profits of $4.65 per contract are available to the trader should Momenta’s shares plunge 50.3% lower to trade below $7.50 by January expiration. The investor responsible for the transaction may simply be purchasing cheap downside protection to hedge a long position in the underlying rather than positioning for an all out collapse in Momenta Pharmaceuticals in the near future. Options implied volatility on MNTA is up slightly by 4.4% to stand at 57.84% as of 11:15am.


http://wallstreetpit.com/54422-pessimistic-player-targets-momenta-pharmaceuticals-put-options