Sell The Call has purchased a protective put for its Arena Pharma covered call trade. The April $7.00 put was purchased for $0.31. This will have a negative impact on the covered call position by $0.31 per share before commissions and fees. The stock is currently trading at $8.30.
Earnings are due out on Monday, March 4th. The release of Arena's drug Belviq is also scheduled to happen in the near future. If either or both of these situations is negative, the stock will be expected to take a hit. This is the reason for the purchase of the put. There is still $0.72 profit per share after commissions if the stock is above $9.00 by the expiration date of March 15th.
Previous covered call trades have been made in AA, OCZ, YHOO, ZAGG, LLEN, CLSN, EDMC, EXAS, ARIA
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