On CNBC's Options Action, Mike Khouw spoke about increased options trading activity in Teva Pharmaceutical Industries Ltd (ADR) TEVA on Thursday.
During the trading session, one bearish trade caught Khouw's attention. A trader bought 2,000 contracts of the January 45 puts for $2. The break even for the trade is at $43 or 7.11 percent lower from the closing price on Thursday. Khouw thinks that a trader is probably insuring hers or his long position from a further decline in Teva Pharmaceutical. He added that hedging a long stock position with options in the biotech sector has a lot of sense, despite high options prices, because the sector is currently under a lot of pressure.
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