One investor apparently thinks that Affymax will continue to
optionMONSTER's Depth Charge monitoring system detected the
purchase of 5,000 August 13 puts for $1.35 to $1.40 and the sale of
an equal number of July 13 puts for $0.75. Volume was more than 4
times open interest at both strikes, indicating that new positions
The investor paid about $0.60 to open the position and will profit
from the drug developer moving sideways in the next month. If that
proves correct, the July puts sold short will become worthless and
the value of the spread will expand. (See our
AFFY rose 0.08 percent to $13.11 yesterday. A Food and Drug
Administration panel backed approval of its Hematide anemia drug in
December, causing the stock to more than double in the next 3-1/2
months. Shares have done little since official marketing permission
was granted on March 27.
often occur on range-bound stocks such as AFFY. It can be
profitable even if the shares fall slightly. For instance, if it
closes below $13 on July 20, he or she will be assigned shares, but
with protection in place thanks to the August contracts.
Overall option volume was 19 times greater than average in the
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