Traders Making Bullish Bets on Sequenom
Traders are making bullish bets on genetic analysis firm Sequenom, expecting positive news about a Down Syndrome test that caused the shares to tank in late April.
SQNM rose 11.93 percent to $5.91 in afternoon trading with above-average stock volume. Option traders targeted the nearest-month calls, piling into the September 6 and the September 7.50 strikes.
Volume totaled 8,524 and 5,109 respectively in each. The activity was below existing levels of open interest, but the transactions were skewed heavily toward purchases.
Sequenom lost 75 percent of its value on April 30 after announcing that the launch of its SEQureDX test would be delayed because employees had mishandled data. The announcement caused several downgrades and undermined the credibility of company, which gapped lower again Aug. 7 on a weaker-than-expected profit report.
With rumors flying that SEQureDX data will be released soon, investors are betting that the stock will move in the next four weeks. Most of the volume in the September 6 strikes priced in the $0.50-$0.80 range this morning, while the September 7.50 calls changed hands mainly for $0.35 to $0.40, according to optionMONSTER's tracking programs.
Some investors sold the September 9 calls for $0.15 to $0.25 to earn premium. Overall options volume in the name was almost twice average levels, with calls outnumbering puts by 10 to 1.
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David Russell is a reporter and writer for OptionMonster.