Options Trading News

December 5, 2012  Wed 9:59 AM CT

Acadia Pharmaceuticals has slipped back below a key $5 level, but today's option activity is topped by large call trade.

optionMONSTER's systems show that a trader sold 7,500 December 2.50 calls against open interest of more than 18,000. At the same time, he or she bought 7,500 January 2014 4 calls for the ask price of $1.95 in volume that dwarfs open interest of just 3 contracts, so this is new activity.

If the December calls were sold to open a new position, this is a diagonal call spread. But it seems much more likely that this is a roll, with the trader selling the in-the-money calls that will expire in a few weeks and opening the position out more than a year to take advantage of any further gains.

ACAD is down 4 percent to $4.80 this morning. The stock gapped up last week from just above $2 to a high of $6.54 on positive news about an antipsychotic drug that it is developing. Shares slipped but have still been closing at or above $5 since then.

More than 20,000 ACAD options have already changed hands this morning, more than twice its daily average over the last month.
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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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