OraSure Technologies Options (OSUR): Unusual Trading Activity

| August 7, 2012 | 0 Comments

OSUR OptionsOptions in medical-diagnostic company OraSure Technologies (OSUR) experienced a large amount of unusual trading activity late yesterday afternoon.

In fact, the option activity was more than five times greater than the average volume for this name.  It certainly looks like traders are taking another shot at this company.

And they just might be on to something…

After trading sideways for most of the year, OSUR broke out in late June.  The stock surged 36% from $10.32 to $14.01 per share on very heavy volume. 

That’s a huge move in a very short period of time.

However, OSUR has now fallen back to around the $10.50 level.  And once again, the stock is getting lots of attention from option traders.

According to our tracking system, one trader came in yesterday and sold 2,000 OSUR September $12.50 put contracts for $2.05 apiece.   

That’s a nice sized bet!

The trader collected a cool $410,000 from the trade.  And he’ll get to keep every penny as long as OSUR makes it back up to $12.50 a share by September expiration.

Remember, put selling is a bullish trade.  To profit, the option trader needs the stock to stay at or above the strike price by expiration. 

Although I like the attractive premiums that were collected, I think it’s unlikely OSUR will get back above the $12.50 level in such a short amount of time.

So, what’s this trader thinking that I’m not?

For those who don’t know, OraSure Technologies develops and manufactures medical-diagnostic products.  These products are used to test patients for HIV infection and other conditions, as well as to test for illegal substances.

The company markets its products primarily to the healthcare and insurance industries in the US and abroad.

Here’s why I think this name is attractive to our put seller…

First of all, OSUR releases their second-quarter earnings after the bell today.  This event could certainly serve as a catalyst for the stock to head higher.

Don’t forget, a number of healthcare names have announced impressive results this quarter.

In addition, the company received huge news from the FDA recently.  On July 5th, the regulatory agency announced its approval of OSUR’s over-the-counter HIV test.   

It’s the first and only rapid over-the-counter HIV test ever approved in the United States.  And it will be available online and in over 30,000 stores beginning this October.

We’ll see how this plays out, but I don’t think this trade has a high chance of success.

For more detailed information on unusual options activity and how you can profit from it, be sure to sign-up for our daily newsletter, Options Trading Research.  It’s always 100% free and packed full of option trading ideas you can use immediately in your own portfolio.  Click here to subscribe for free.

Safe Trading,

Marcus Haber

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.