We saw several intriguing strategies in the options trading universe yesterday that might interest investors.
An investor made a big move Tuesday in biotech firm Seattle Genetics (NASDAQ: SGEN) as its volatility has fallen to new 52-week lows.
SGEN trades around $14.60 and have trended down from two quick trips above $17 in January. The 30-day historical volatility has fallen to 26%, dropping from above 60% in the last five months. The average implied volatility is 41%, way down from 123 back in September.
OptionMONSTER’s tracking systems detected the sale of 2,500 SGEN May 15 Calls from $0.80 down to $0.75. In the next few minutes SGEN 2,500 May 12 Puts were bought for $0.30. The volume at both strikes was more than 10 times the previous open interest, so this was a new opening combination trade.
The strategy could be an outright bearish play that would collect a net credit and really start gaining below $12. But this could also have been done against long shares of SGEN as a collar position that would be protective but bullish up to $15.
Find more option analysis and trading ideas at Options Trading Strategies.
Ctrip.com International (NASDAQ: CTRP) has started to move higher in recent sessions, but one investor apparently thinks that it won’t journey far.
OptionMONSTER’s tracking systems detected the sale of 2,150 CTRP May 35 Puts for $0.67 and an equal number of CTRP May 45 Calls for $0.78, resulting in a credit of about $1.45. Volume was more than 20 times open interest in both strikes.
This short strangle position will profit from the Chinese travel stock remaining in a range. If it’s between $35 and $45 on expiration, the investor gets to keep the credit.
CTRP rose to $40.28 yesterday and is up 8% in the last week. The company had been growing rapidly but has languished along with other Chinese stocks since late 2010 as investors worry about inflationary pressures.
The last earnings report on Feb. 14 beat expectations, though revenue guidance was below consensus estimates. Yesterday’s trade pushed total option volume in CTRP to more than four times the daily average.
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