Celeryroot,
The market makers adjust the bid and ask of options in accordance with stock price. In thinly traded options that means the bid and ask can bounce a lot between trades, so that the high of the ask and the low of the bid are often not recorded, unlike stock, in which the daily high and low is usually quite close to the ask high and bid low, and for which there are intraday graphs available. If you don't have intraday data it's hard to tell with such options unless you're watching the whole time, hence my question. I will grant you, however, that the price action in Ligand's stock today suggests there was little room for the bid and ask of the puts to bounce. Thus you're probably right about this being a sell.
Regardless, who knows if this transaction is but a link in a chain of one person's play, and what the small influence on the price would be. Is he, for instance, legging into a bear spread, or setting up a buy for a covered write? Is the money smart or dumb?
I imagine further pursuit of this topic should be in the clubhouse; let me know if you want to go there.
Regards, Tuck |
