Roger Nusbaum: Northfield Labs Options Overpriced? I Doubt It

Roger Nusbaum wrote this on Dec 18 when NFLD was 14.79. Now NFLD is 4.12:

This chart is the volatility for Northfield Labs (NFLD) which has come up in a few comments.
I don't know what the market is pricing in (I specifically did not try to figure it out) but something is going on. A big move in either direction should not be a shock.

This brings up another point. Sometimes options have too much premium to even sell. The Jan 7.50 puts were bid at $1.30 at the close. That kind of premium for a strike 50% away from the market says to me that market thinks $7.50 (or maybe more correctly $6.20, $7.50 minus the premium) by January 19 is within the realm.

As a matter of philosophy I don't believe the options market gives away money for nothing.