Traders wager on rebound in Idera

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Idera Pharmaceuticals has pulled back hard, and the bulls are stepping in.

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 Education 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 7-to-1 ratio.



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: IDRA

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