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Sangamo selloff attracts buyers

By: optionMONSTER
Posted: 10/3/2011 11:00:00 AM
Referenced Stocks: SGMO

Sangamo Biosciences fell hard today, and some traders are stepping in.

optionMONSTER's Heat Seeker monitoring system detected unusual call buying in the drug developer, which is down 25 percent after announcing poor Phase 2 trial results for its SB-509 diabetes treatment. The November 3 contracts were the busiest strike, with more than 1,000 contracts purchased for $0.90 and $0.95. Volume was 100 times previous open interest.

About 600 November 6 calls were also purchased for $0.15, but activity was within the earlier positioning.

SGMO is trading at a $3.28 after hitting a new 52-week low of $3.13 earlier in the session. It attempted to rally on Sept. 19 after announcing one of its compounds offered a "functional cure" for HIV/AIDS, but the bears stepped in and it's been falling ever since.

The company focuses on using molecular genetics to cure disease, and all of its potential products are in early stages of development.

Overall option volume in SGMO is quadruple the daily average so far today, with calls outnumbering puts by 7 to 1.