Oncothyreon trader plays calendar
Chris McKhann | [email protected]
ONTY slipped 0.58 percent to end the session at $5.13, trapped between about $5 and $5.50 since Sept. 27. Shares were above $6.20 before falling into that range, their highest level since gapping down from above $8 in early March.
Total option volume in the name was 11,147, compared to a daily average of just 477, and only 719 were calls. Dominating the volume was a put calendar spread.
A trader bought 5,000 May 5 puts for the ask price of $2.15 and sold the same number of the December 5 puts for the bid price of $0.65, according to optionMONSTER's Depth Charge system.
The trade profits if ONTY remains around $5, with losses possible if shares move too far in either direction. Traders often use calendar spreads if they believe that implied volatility is too high, with greater time decay in nearer-term options.