Options Trading News

April 11, 2013  Thu 10:03 AM CT

A huge trade is betting that Cell Therapeutics will not become a penny stock.
More than 20,000 CTIC options have change hands already today, compared to a full-session average of 1,100 contracts in the last month. Virtually all of that volume is in one trade.

optionMONSTER systems detected the sale of 20,000 June 1 puts for $0.06 this morning. The volume was twice the previous open interest in the strike, clearly showing that this is a new position.

The put seller apparently believes that the cancer-drug developer will continue holding above $1 in coming months. He or she is also willing to buy shares if they fall below that strike price. Such "nickel" strategies have a high probability of profit but also high risk, as they are usually leveraged up to get a reasonable profit. (See our Education section)

CTIC is up fractionally at $1.17 today. It has tested support at $1 in the last few weeks but hasn't traded below that key level since gapping higher at the start of September.
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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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