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. OptionMONSTERs 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. Todays 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
theyre wrong theyll have to buy the stock for $6. But given the income earned,
they wont 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. Affymax (NASDAQ: AFFY)
(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. optionMONSTER ® provides stock market
insight, option trade ideas, and options education to meet the needs of
do-it-yourself investors.
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