Biopharmaceutical firm Affymax (NASDAQ: AFFY) has had big problems since it reported last June that its Hematide kidney medicine increased the risk of heart failure. It plunged to about $6 on the news and has been grinding sideways ever since.
However, some options trading investors have regained confidence in the drug developer.
OptionMONSTER’s tracking systems detected the sale of 3,000 AFFY May 6 Puts for $0.55 against no existing open interest. AFFY was quoted at $5.94 when the activity occurred, but then started climbing. It was up 3.05% to $6.09 in morning trading.
Today’s put sale reflects a belief it will remain at or above that level. If the investor is right, he or she will keep the $0.55 credit. If they’re wrong they’ll have to buy the stock for $6. But given the income earned, they won’t lose money as long as it stays above $5.45.
The put sale pushed overall options volume in AFFY to 15 times greater than average.
The company also sold 8.47 million shares in a secondary offering last week and said it plans to present new data on Hematide, now known as peginesatide at the National Kidney Foundation Spring Clinical Meeting on April 27.
(Chart courtesy of tradeMONSTER)
Options trading today in AK Steel (NYSE: AKS) suggest the stock will continue to trade in a tight range. AKS rose 2.27% to $15.78 this morning, and has remained mostly between $17 and $14 since November.
There was a sale of 5,000 of the AKS January 2013 20 Calls, almost all of them for $1.95. That was a cent below the bid price, with a wide spread, clearly indicating a sale. Previous open interest was just 309 contracts, so this was a new opening position.
There was no corresponding activity in the underlying shares, so this could be a naked call sale as a bet AKS will stay below $20 over the long term — even though it was above $25 a year ago. It is also possible that the options were sold against an existing long position as a covered-call trade which would be bullish up to $20.
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