MNTA - Momenta Pharmaceuticals, Inc. – Shares of the biotechnology company spent the better part of the trading session on the decline, falling as much as 3.5% in afternoon trading to an intraday low of $14.38. The stock had more than doubled toward the end of July, rallying 122.6% from $11.77 up to $26.20 in a matter of two trading sessions, but those gains proved to be short-lived. MNTA’s shares spent the final week of July and the month of August in a downward spiral, slipping 46.2% from its 52-week high of $26.20 on July 26, 2010, down to a low of $14.10 on August 31, 2010. One options investor observed today does not seem to think Momenta’s shares have as yet bottomed out. The pessimistic player initiated a ratio put spread to position for the price of the underlying stock to extend losses through expiration in January 2011. The trader purchased 4,000 puts at the January 2011 $12.5 strike at a premium of $2.25 each, and sold 8,000 puts at the lower January 2011 $10 strike for premium of $1.00 apiece. Net premium paid to establish the transaction is reduced to just $0.25 per contract. The investor is prepared to make money should MNTA shares plunge 14.8% from today’s low of $14.38 to breach the effective breakeven price of $12.25 by expiration day. Maximum potential profits of $2.25 per contract are available to the ratio-spreader if shares fall 30.45% to settle at $10.00 at expiration. MNTA’s shares last traded at a 52-week low of $8.70 back on November 3, 2009.

PSS - Collective Brands, Inc. – The holding company of Payless ShoeSource, Inc. and Stride Rite Corp. realized a 9.8% pullback in the price of its shares today to secure a new 52-week low of $12.41 after revealing that second-quarter sales in stores open for at least one year declined 6.4%, while total U.S. revenue plunged 7.1%. PSS reported second-quarter results after the closing bell on Wednesday, posting earnings of $0.32 a share, and disappointing analysts expecting the firm to rake in net income of $0.45 a share. It looks like the sharp decline in shares, however, did not deter one contrarian options trader from positioning for a Collective Brands rebound by October expiration. The investor appears to have established a bullish risk reversal play, selling 2,000 puts at the October $12 strike at a premium of $0.55 each in order to purchase 2,000 calls at the higher October $14 strike for premium of $0.50 apiece. The trader pockets a net credit of $0.05 per contract on the risk reversal and keeps the full amount as long as PSS shares exceed $12.00 through expiration. Profits above and beyond the credit received today start to amass if the price of the underlying stock jumps 12.8% to exceed $14.00 by expiration day in October. Options implied volatility on PSS is down 8.9% at 52.84% following earnings.

ME - Mariner Energy, Inc. – News of an explosion on a Mariner Energy-owned platform in the Gulf of Mexico sent shares of the oil and natural gas production company into freefall earlier in the session and pushed options implied volatility on the stock to the highest level in at least one year. ME’s shares fell 16% to an intraday low of $16.92 in the span of approximately 15 minutes before recovering the vast majority of those losses in the 45 minutes that followed. Shares are currently down just 2.9% to stand at $22.67 as of 1:05 pm ET. Reports of the explosion incited frenzied options activity on the stock as investors seemed to expect the worst case scenario was upon them while all-too-recent memories of BP’s disaster came to mind. Options implied volatility on the stock shot up as much as 241.5% from a reading of 22.37% before news of the explosion hit and touched a high of 76.40% post-explosion data. Put options flew off the shelves and overall options volume surged to 46,000 contracts versus previously existing open interest of just 6,547 lots. Puts at the September $20 strike received the most traffic as more than 21,000 lots changed hands there by 1:15 pm ET. Investors appear to be buying and selling equal amounts of the September $20 puts at an average premium of $0.86 each. Some of the 9,200 puts sold at that strike may be the work of traders ditching puts they purchased while in panic-mode earlier in the session. Premium on the September $20 strike puts surged to a high of $4.30 each when ME’s shares were trading at their lowest price of the mini-crisis. If traders purchased the puts at $4.30 they would now only receive $0.40 per contract by selling them just a couple of hours later. Traders also picked up roughly 2,400 puts at the higher September $22.5 strike for an average premium of $1.28 apiece. It will be interesting to see how options trading on the stock will play out as more and more information about the explosion and its potential consequences for Mariner Energy are revealed.