Options Trading News

August 13, 2013  Tue 4:14 AM CT

A trader is looking for biopharmaceutical company GTX to recover all of the losses suffered in a steep drop last month.

optionMONSTER's Heat Seeker system detected the purchase of 3,260 October 7 calls in one print for $0.90 yesterday. This is clearly a new position, as open interest in the strike was just 51 contracts before the trade appeared.

GTXI ended yesterday unchanged at $4.48, just above their 10-day moving average. The cancer-drug developer plunged from above $7 on July 10 and again after reporting second-quarter results the next week but bounced at a support level near $4 level last week.  

The calls purchased yesterday, which lock in the price where traders can buy the stock, are betting that shares will rally back above $7. But these options will expire worthless if GTXI remains below that level through mid-October. The company is expected to release data on a key drug that prevents muscle loss in lung-cancer patients in the third quarter. (See our Education section)

Total option volume topped 19,700 contracts yesterday, more than 6 times its daily average for the last month. Calls outpaced puts by nearly 2 to 1.
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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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