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Why trader is selling calls in Optimer

By: optionMONSTER
Posted: 11/7/2011 2:06:00 PM
Referenced Stocks: OPTR

Optimer Pharmaceuticals is getting crushed today, and one investor is doubtful of any quick rebound.

optionMONSTER's tracking systems detected the sale of 5,000 March 12.50 calls for $1 against open interest of just 159 contracts. The trade pushed overall options volume in the name to almost triple the daily average.

OPTR is down 11.31 percent to $10.98 in afternoon trading and has lost more than 20 percent of its value in the last week. Most of that drop occurred after the company reported a wider-than-expected loss after the bell last Thursday.

Writing calls obligates the investor to sell shares at the strike price. He or she may own the stock and is using the options to generate income while holding a position. Such trades frequently occur after a stock makes a big move because volatility, and thus option premiums, remains elevated. (See our Education section)