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Today, we’re opening a new bearish trade on Teva Pharmaceuticals (NYSE:TEVA). TEVA has been in a steady downtrend for nearly a year and a half, and we don’t think the bearish move is over. As the company prepares for its next quarterly earnings announcement on Feb. 13, before market open, it is facing some troubling fundamental headwinds.

Recently, TEVA confirmed that a U.S. court ruling has invalidated four patents on its blockbuster multiple sclerosis drug, Copaxone. This opens the company up to possible generic competition, and that could be disastrous for TEVA since Copaxone is responsible for 16% of TEVA’s pharmaceutical sales and more than 40% of its operating profit.

This all comes at a time when the company is trying to justify the $40.5 billion it paid Allergan (NYSE:AGN) for its generic pharmaceutical business, which is showing slower than anticipated roll outs and sales.

We are buying the $32.50 strike price, as this price has served as support twice during the past week. We expect the stock to easily drop back down to this level and wouldn’t be surprised if it drops even further, staying within the down-trending channel that started last October.

‘Buy to open’ the TEVA March 32.50 Puts (TEVA170317P00032500) for a maximum price of $0.90.

You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in our Advanced Technical Analysis Program.

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next SlingShot Trader trade and get 1 free month today by clicking here.