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ImmunoGen faces highly bearish bet

By: optionMONSTER
Posted: 10/10/2012 12:49:00 PM
Referenced Stocks: IMGN

ImmunoGen gapped lower last month, and one investor is looking for the drop to continue.

optionMONSTER's Depth Charge monitoring system detected the purchase of about 2,900 November 14 puts for $0.67 and the sale of 1,754 November 15 calls for $0.82. Volume was more than 20 times open interest at both strikes, indicating that new positions were implemented.

The trade cost about $50,000 and is highly bearish in the drug developer. Because they own more puts than calls, the investor will enjoy significant leverage to the downside. They also stand to lose money if it pushes above $15 because of the calls sold short.

IMGN is off 0.68 percent to $14.62 in early afternoon trading and is down almost 10 percent from its peaks late last month. Much of that decline occurred on Sept. 27, when UBS initiated the stock with a "sell" rating and assigned a $10 price target.

The shares gapped lower on that news. They attempted to rebound last week but hit resistance at the same bearish gap, which could be leading some chart watchers to believe that a downtrend is taking shape.

Overall option volume is 10 times greater than average so far today, according to the Depth Charge.