Unusual Options Activity: Exact Sciences Corp (EXAS)

Health diagnostics company Exact Sciences Corp (EXAS) is down nearly 25% in the past year. One trader is betting on a further decline in the coming weeks.

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  • That’s based on the June $50 puts. With 38 days until expiation, 2,758 contracts traded compared to a prior open interest of 108, for a 25-fold rise in volume on the trade. The buyer of the puts paid $1.46 to make the bearish bet.

    Exact shares recently traded for about $54, so the stock would need to drop about 7.5% for the option to move in-the-money. Exact is also trading close to its 52-week low of $52.25.

    The company has had a rough year. While revenues are up by 6%, profitability has been elusive.

    Plus, Exact’s debt level has soared by 79%, a sign that could become dangerous for investors if earnings and cash flow don’t improve.

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  • Action to take: With Exact shares trending lower, investors should hold off on buying for now. Once shares have stopped falling and have put in a bottom, interested investors can start to cautiously build a position.

    For traders, the June $50 puts have little time before expiration, but could still see mid-to-high double-digit returns, particularly if the stock has a bad day or two in the coming weeks.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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