Idera Pharmaceuticals has pulled back hard, and the bulls are
optionMONSTER's Heat Seeker monitoring program yesterday detected
the purchase of 2,700 November 4 calls for $1 and the sale of an
equal number of November 7.50 calls for $0.30. Volume was more than
twice the previous open interest in each strike, which suggests
that new positions were initiated.
Known as a
bullish call spread
, the trade will inflate to $3.50 if the biotechnology stock is at
$7.50 or higher on expiration in mid-November. That would represent
profit of 400 percent based on its $0.70 cost. (See our
for more on the leveraging potential of options.)
IDRA rose 11 percent to $2.82 yesterday. It ran from under $1 to
above $6 between last July and March but then rolled over and lost
more than half its value amid the recent Nasdaq selloff. Shares are
now attempting to hold support around the same $2.50 level where
they consolidated between August and November, which could make
some chart watchers believe that the stock will rebound.
Total option volume was 6 times greater than average in the name,
according to the Heat Seeker. Calls outnumbered puts by a bullish
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.