NEW YORK (
has not announced any news since releasing its earnings on Monday when it missed earnings estimates by 8 cents a share, but at least one investor bought puts Thursday, betting on potential near-term slide.
More than 9,000 March 55 puts have crossed the tape so far on the day versus open interest of just 534 contracts, indicating investors traded these options to open. The puts, which have declined 12 cents on the day to roughly $1.05 per contract, have an implied volatility of 27 compared to a 30-day historical volatility of 20%. Today's buying action has pushed up implied volatility.
Investors who bought these puts are calling for the stock to close lower than $53.95 at March expiration, in which case investors experience unlimited profits. If the stock drops significantly, investors could choose to sell back these options and book profits instead of holding them. If the stock rallies higher than the breakeven, investors incur a maximum loss of the premium paid, or $1.15 per contract.
AMGN shares saw a recent low of $54.05 on Nov. 5, but have since rallied around 7%. The stock is currently trading at $58.22 a share, and at least one bearish investor expects the stock to drop back down to that level throughout the next 50 days until March expiration.
-- Written by Jud Pyle in Chicago
At the time of publication, Pyle did not have a position in the stock mentioned. Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."