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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I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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