Options Show Worry in Express Scripts & Medco Merger (ESRX, MHS)

Express Scripts, Inc. (NASDAQ: ESRX) is trading higher despite a flagged trade which stands out.  The concern is that more and more bets are coming in against the chances of an approval of this ongoing MedcoHealth Solutions Inc. (NYSE: MHS) merger.  What is interesting is that Express Scripts shares are higher on not so out of the ordinary trading volume.  It appears as though there is a chicken-bull trade being put on in case the deal is blocked or in case the coming news flow is not very favorable on the prescription benefit management company.  The ongoing scrutiny from the Federal Trade Commission and from the Department of Justice has probably not been any serious means of help.  Here is the volume in the corresponding Put options which expire in FEB-2012 in the various strike prices of $50.00, $47.50, and also in the $45.00:

PUTS  Traded OpInt
45.00 1,036  10,122
47.50 2,616   5,670
50.00 11,996 4,950

Express Scripts shares are trading up 1.7% at $52.03 and MedcoHealth shares are trading up 1.6% at $63.01.

JON C. OGG