OCR – Omnicare, Inc. – Shares of the geriatric pharmaceutical services company fell as much as 10.10% at the start of the trading session to touch down at an intraday low of $22.14, but managed to claw their way back up, and currently stand just 1.35% lower on the day at $24.30 as of 1:10 pm ET. Omnicare’s shares dropped sharply on news its president and CEO, Joel F. Gemunder, retired. The CEO’s exit music coupled with increased demand for options on Omnicare inspired a more than 29.1% increase in the overall reading of options implied volatility on the stock to 48.64% this afternoon. The initial plunge in the price of the underlying shares fueled demand for near-term bearish put options. Traders scooped up 1,700 puts at the August $22.5 strike for an average premium of $0.84 each. Meanwhile, it looks like one trader rolled a previously established long put stance on the stock down to a lower strike price, selling 1,000 in-the-money puts at the August $25 strike for an average premium of $2.05 each, in order to buy the same number of contracts at the lower August $20 strike at an average premium of $0.33 a-pop. Options investors exchanged more than 14,600 contracts on Omnicare by 1:15 pm ET, which exceeds overall previously existing open interest on the stock of 13,347 lots.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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