Thermo Fisher Scientific is down sharply since its last earnings report despite reporting strong numbers, but traders see a limit to further downside.
More than 4,000 November 105 puts were sold for $0.70 to $0.80 yesterday, according to optionMONSTER's tracking systems. These are new positions, as there was no open interest in the strike before the session began.
The traders collect the premium from the option sales and are looking for TMO to stay above $105 through expiration in mid-November. If the stock falls below that strike price, these put sellers will be on the hook to buy shares at that level. Investors sometimes sell puts this way in hopes of picking up a stock at an effective discount to existing levels. (See our Education section)
TMO slipped 0.15 percent to $122.10 yesterday. The medical-diagnostics company gapped above $140 on July 22 after beating earnings and revenue expectations while raising guidance. The stock fell near $117 on Monday but has bounced since then.
Its next quarterly results are expected to come out in the second half of October, about a month before yesterday's short puts expire.
Yesterday's overall option volume in the name was 10 times its daily average for the last month. The November put selling accounted for about 96 percent of that total.
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