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Why Are Traders Bullish on Sequenom?

Sequenom fell by 75 percent overnight in late April after it revealed that some employees had mishandled data and results for its Down syndrome test. The genetic-analysis company fell as low as $2.86 after that debacle, but yesterday its stock rallied back 58 percent.

Well over 54 million shares changed hands yesterday, more than nine times the average stock volume of just over 5 million. Sequenom options were also active with more than 86,000 calls traded, dwarfing the average call turnover of 2,600 in the last month.

Traders were all over the map, but the call activity was concentrated at the June 4 and June 5 strikes, where 18,880 and 24,003 of the contracts traded respectively with strong buying patterns, according to OptionMonster's tracking systems. The call turnover was more than double and triple the open interest at those strikes.

Shares of Sequenom rocketed 58.21 percent to close the regular session at $5.30 and rose in after-hours trading. That's nearly double the 52-week low of $2.86 from just May 18 but still a long way from its $29.14 high.

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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.

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