OptionsHouse

Options Trading News

September 20, 2012  Thu 9:57 AM CT

ONXX: SEE CHART GET CHAIN FIND STRATEGIES
Onyx Pharmaceuticals has been climbing and the bulls are staying in the trade.

Two days ago, our Heat Seeker program detected unusual activity as an investor boosted by 50 percent the size of a short-term upside trade. Today a trader is going further out in time, but the sentiment remains solidly positive.

A block of 2,500 February 95 calls was purchased for $5.70 and an equal number of February 85 calls was sold for $9.55. Volume was below open interest in the 85s, which indicates that an existing long position was closed and rolled to the higher strike.

The investor collected a credit of $3.85 and will make more money if the drug developer continues to rally. It's already up more than 80 percent since June after a Food and Drug Administration panel voted to recommend approval of the company's Kyprolis blood-cancer drug.

ONXX is down 1.9 percent to $84.19 this morning after hitting an all-time high above $86 yesterday. If today's option trader expects a pullback, it makes sense to roll the calls because the February 85s have a greater delta than the 95s (0.55 versus 0.38). That would make them more sensitive to losing value from a near-term decline in the share price. (See our Education section)

Overall option volume is triple the daily average in ONXX so far today, with calls outnumbering puts by more than 500 to 1.
Share this article with your friends


Invest Like a Monster - San Antonio: October 9-10

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

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.

View more education articles »