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July 15, 2014  Tue 9:20 AM CT

TRGT: SEE CHART GET CHAIN FIND STRATEGIES
Put buying tops the option trade in biopharmaceutical company Targacept as shares head lower.

optionMONSTER systems show that 4,075 August 4 puts have been purchased for the ask price of $0.65. This is clearly a new position, as previous open interest in the strike was just 775 contracts.

The puts aren't tied to any trading in the underlying shares identified by our scanners today, but they were very likely bought to hedge a long position in the stock. (See our Education section)

TRGT is down 7.49 percent this morning to $4.08, dropping after the conclusion of a trial on its Alzheimer's drug. The stock is highly volatile, with 10-day historical volatility of 52 percent and average implied volatility of 174 percent.
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Education & Strategy

Gamma

As we continue to discuss the Greeks, we come to the first of the strike based Greeks called Gamma. Gamma is known as the second derivative, while delta is the first.

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