An options trading investor is buying and selling options on biotech firm
BioMimetic Therapeutics (NASDAQ: BMTI ) as its stock drops to what might be a
support level. OptionMONSTERs Heat Seeker tracking system detected a surge of
activity in the BMTI June 11 Calls and the BMTI June 15 Calls, which traded for
$3 and $1, respectively. The lower-strike contracts were bought and the higher
ones were sold, resulting in an overall cost of $2. About 2,000 contracts traded
in each. The investor will earn twice that amount if the biotechnology stock
closes at or above $15 on expiration. The position will lose money anywhere
below $13. Find more option analysis and trading ideas at Option Trading
Strategies . BMTI fell 1.10% to $11.72 yesterday and has shed 16% of its value
in the last month. Most of that drop occurred after March 10, when management
forecast a wider-than-expected loss for fiscal 2011. BioMimetic develops and
commercializes products that stimulate the body's natural tissue regenerative
process. The shares have now almost returned to their 200-day moving average
(purple line in chart), roughly the same price where they peaked in November.
Some chart watchers may expect support around this level. Yesterdays bullish
trade, a vertical spread, pushed total options volume in BMTI to 18 times
greater than average with calls accounting for 90% of the activity. BioMimetic
Therapeutics (NASDAQ: BMTI) (Chart courtesy of tradeMONSTER ) optionMONSTER ®
provides stock market insight, option trade ideas, and options education to meet
the needs of do-it-yourself investors.
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