What the bulls are seeing in BioMimetic

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BioMimetic Therapeutics has fallen back to a potential support level, and one investor is buying and selling options in hope of a rebound.

optionMONSTER's Heat Seeker tracking system detected a surge of activity in the June 11 calls and the June 15 calls, which traded for $3 and $1, respectively. The lower-strike contracts were bought and the higher ones were sold, resulting in an overall cost of $2. About 2,000 traded in each.

BMTI The investor will earn twice that amount if the biotechnology stock closes at or above $15 on expiration. The position will lose money anywhere below $13.

BMTI fell 1.10 percent to $11.72 yesterday and has shed 16 percent of its value in the last month. Most of that drop occurred after March 10, when management forecast a wider-than-expected loss for fiscal 2011.

The shares have now almost returned to their 200-day moving average (purple line on chart at right), roughly the same price where they peaked in November. Some chart watchers may expect support around this level.

Yesterday's bullish trade, a vertical spread, pushed total options volume in BMTI to 18 times greater than average. Calls accounted for 90 percent of the activity. (See our Education section)

(Chart courtesy of tradeMONSTER)



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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This article appears in: Investing , Options

Referenced Stocks: BMTI

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