Traders like Chelsea for long haul

By
A A A

One investor is looking for major upside in Chelsea Therapeutics, even with the stock down hard today.

optionMONSTER's trade scanners detected the purchase of some 5,000 March 3 calls for $1.41 and the sale of a matching number of March 7 calls for $0.44. Volume was below open interest at the lower strike, indicating that an existing short position was closed and rolled forward in time.

CHTP is down 6.01 percent to $3.13 after the drug developer sold 6.67 million shares for $3 each. Proceeds will be used to finance development of its Northera drug for the treatment of lightheadedness, which will be reviewed by a Food and Drug Administration advisory panel on Jan. 14.

The investor probably owns shares and had sold the March 3s as part of a covered-call trade . He or she then bought those contracts back today and rolled to the higher strike. It cost them $0.97, but they now have the right to make $4 more on the stock.

Making the adjustment made sense with the stock falling because the March 3 calls they were short have a higher delta . They're down $0.20 today, compared with a $0.15 drop for the 7s. (See our Education section)

Total option volume in the name tops 16,000 contracts so far today, 21 times greater than its daily average for the last month..



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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: CHTP

optionMONSTER

optionMONSTER

More from optionMONSTER:

Related Videos

Stocks

Referenced

Most Active by Volume

91,252,153
  • $13.78 ▼ 4.31%
68,133,496
  • $12.93 ▲ 6.77%
57,268,074
  • $46.13 ▲ 2.47%
43,432,023
  • $105.22 ▲ 0.37%
40,880,685
  • $13.46 ▲ 8.90%
40,712,405
  • $98.62 ▲ 0.82%
39,776,976
  • $16.72 ▲ 0.72%
34,688,871
  • $11.16 ▲ 3.05%
As of 10/24/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com