By Jud Pyle, CFA, chief investment strategist for the Options News Network

During midday trading, an investor boosted options volume in healthcare company Wyeth ( WYE) on a potentially bearish bet exactly two weeks before its second-quarter earnings are due.

The investor sold more than 14,000 Jan. 2010 30 puts for approximately 23 cents and simultaneously bought 7,000 Jan. 2010 35 puts for 77 cents to pay 30 cents for the spread. The Jan. 30 puts have a volume weighted average price (VWAP) of $0.2350 and the VWAP of the Jan. 35 puts is $0.7698.

The Jan. 30 puts are down three cents on the day and are home to current open interest of 5,000 contracts, whereas the Jan. 35 puts have gained five cents so far today and are home to current open interest of 7,800 contracts.

Normal daily options volume in WYE is approximately 18,000 contracts across all strikes. The majority of strike prices in WYE options have not accumulated any volume today, but this investor single-handedly trumped normal daily options volume by 3,000 contracts.

WYE did not announce any significant news today that could have sent the stock trading in the red. These shares have rallied more than 50% since reaching a 52-week low of $29.89 on Oct. 10, but it's interesting that at least one investor seems to be betting that WYE stock will expire below $34.70 or higher than $25.30. Investors should not run out and sell WYE shares just because of heavy put activity today. WYE stock has dropped 36 cents to $44.79 a share so far today and it looks like at least one investor is calling a continuing decline in shares.
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."

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