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September 27, 2013  Fri 3:16 AM CT

ITMN: SEE CHART GET CHAIN FIND STRATEGIES
A trader is betting that biotechnology company InterMune will spike higher in the next seven months.

optionMONSTER's Heat Seeker system detected the purchase of 2,000 April 15 calls in one print that went for $3.50. Open interest in the strike was just 111 contracts before the trade appeared, showing that this is clearly a new position.

These long calls lock in the price where the stock can be purchased through mid-April 2014 no matter how far it might rise. They could be sold earlier at a profit if premiums gain with a rally before then, but the contracts could also expire worthless if shares don't climb far enough. (See our Education section)

ITMN gained 1.84 percent yesterday to close at $14.97. The drug developer spiked higher after reporting second-quarter results on July 24 but has been trapped between $14 and $15.50 since early August.

Total option volume in ITMN yesterday was 5.5 times its daily average for the last month. Overall calls elipsed puts by almost 2 to 1.
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Options Academy: Ron's Risk Calculation--A Real Life Example

It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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