Traders aren't giving up hope of a big rally in drug developer
optionMONSTER's Heat Seeker monitoring system detected the purchase
of 3,000 November 5 calls for $0.80 and the sale of an equal number
of October 5 calls for $0.40. Volume was below open interest in the
Octobers, indicating that an existing position was closed and
rolled forward in time.
lock in the price where shares can be bought, letting investors
cheaply position for a move higher and generate significant
leverage if it does. Adjusting the trade today cost $0.40 and
provided an additional month for a rally to unfold. (See our
section for more on how options can be used to manage risk more
XOMA is up 9.8 percent to $4.93 in midday trading and has roughly
doubled since the beginning of 2013. It's been pulling back in the
last two months and is climbing again today after finding support
at its 100-day moving average.
The company has a pipeline of several potential drugs. Gevokizumab,
a potential inflammatory treatment, is the most advanced in terms
The Heat Seeker also showed buying in the September 5 upside
contracts back on
. They proceeded to more than double after the alert.
Total option volume is 9 times greater than average so far today,
with calls outnumbering puts by more than 600 to 1.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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