Options Trading News

November 1, 2013  Fri 3:47 AM CT

Drug developer XOMA is drawing a large call trade ahead of its earnings report next week.

A trader sold 6,000 December 5 calls for the bid price of $0.40 against previous open interest of 8,874, according to optionMONSTER systems. Just before, a block of 6,000 June 5 calls was bought for the ask price of $1.55 in volume far above the open interest of just 94 contracts, so that is a new position.

This could be a new calendar spread established for $1.15, which would be looking for XOMA to settle in around $5 in coming weeks. Alternatively, it could also be a roll, with the trader buying more time for the stock to push back to new highs. (See our Education section)

XOMA gained 3.2 percent to $4.51 yesterday. The company, which is involved in antibody-based therapeutics, was at a high of $5.54 at the start of the month.

More than 17,800 XOMA options changed hands overall yesterday, 14 times its average daily volume. Of those contracts, only 265 were puts.

The company is scheduled to release third-quarter results on Nov. 7 after the close.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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