Options Trading News

July 12, 2013  Fri 3:16 AM CT

A long-term trade in Mako Pharmaceuticals is looking for shares to run back to highs.

optionMONSTER systems show that 8,695 MAKO options changed hands yesterday, more than 10 times its daily average over the last month. Almost all of that was in a January 2015 call spread.

A trader bought 4,000 of the 17.50 calls for $1.65 and sold 4,000 of the 30 calls for $0.35. Volume was above the previous open interest at each strike, so this is new positioning.

The trader spends $1.30 on this vertical spread to get the exposure up to $30. The maximum gain if shares are at or above that level is $11.20. The delta of the higher-strike calls suggests a 13 percent probability that MAKO will be above that price at expiration. (See our Education section)

The stock rose 1.98 percent yesterday to close at $11.84. That is around the middle of its recent trading range, as shares have been trending up from a low of $10 in April. Shares were above $30 last May.
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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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