A large put trade is positioning for a big drop in biopharmaceutical company MannKind, which hit new highs this morning.

optionMONSTER systems show that a trader sold 9,000 January 4 puts for $0.69 and, seconds later, bought 4,000 January 7 puts for the ask price of $2.31. The volume at each strike was more than 3 times higher than the strike's open interest before the trade appeared, indicating that this is a new ratio spread.

This sale of the lower-strike puts greatly offsets the cost of the higher contracts. The trade could be looking for shares to fall to $4 but not below that level, or it could also a relatively low-cost protective hedge against a pullback in the stock. (See our Education section)

MNKD is up 6.03 percent to $7.95 near midday trading after peaking at $7.97, a 52-week high. It was down at that $4 a month ago and near $2 at the start of December.

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