Ziopharm Oncology is expected to release key drug data by the
end of the year, and traders are looking for good news.
optionMONSTER's Heat Seeker tracking system detected the purchase
of more than 5,000 April 7 calls for $0.65 to $0.80. Volume was
more than 45 times previous open interest at the strike.
Those buyers have now locked in a $7 purchase price on the company,
whose Palifosfamide cancer drug is undergoing Phase 3 trials. The
stock could rip higher if the results are positive, causing those
calls to generate major leverage.
If the data misses expectations, however, ZIOP could fall sharply.
rather than shares limits that risk and is more effective than
picking arbitrary stop-loss levels.
This is especially useful because the drug-trial data will probably
be released outside of market hours, potentially causing a price
gap during extended trading. (See our
for more ideas on how options can be used to manage risk.)
ZIOP is up 0.59 percent to $5.11 afternoon trading and has been
grinding higher since the first half of 2009. More than 5,300
contracts have traded in the name so far today, compared with about
1,000 in a typical session. Calls account for a bullish 98 percent
of the volume.
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