Options Activity for Friday, August27, 2010
STEC, Inc. (STEC) and Human Genome Sciences (HGSI)
I hope that your trading is going well, as I know that members of S.O.M.E. are making the most of the market movements and their returns.
Speculative investors today have set their sights on STEC, Inc. (STEC) and Human Genome Sciences (HGSI), with volume climbing well beyond expectations for both stocks. With the major market indexes solidly higher this afternoon, it seems that options players have rediscovered their appetite for bullish bets.
STEC, Inc. (STEC)
Call volume has ramped up to two times the norm on STEC, with approximately 6,100 contracts changing hands so far. The equity's narrowly out-of-the-money September 12 strike is most active, with 2,275 contracts changing hands, but the September 13 strike has seen a respectable 1,153 call contracts cross the tape.
Shares of STEC have swallowed a 32.3% loss year-to-date, and they're trading well below resistance at their 10-day and 20-day moving averages -- but the stock is up about 4% this afternoon. With 14.6% of the equity's float sold short, it's possible that bearish bettors are buying calls in order to hedge against a continued rally.
Human Genome Sciences (HGSI)
Meanwhile, call volume has surged to seven times the expected level on HGSI, with roughly 17,000 contracts changing hands. Most of the activity is taking place in the stock's January 2011 series of options, with one speculator purchasing a block of 3,000 January 27 calls and selling an equivalent number of January 30 calls.
HGSI is up about 4.8% this afternoon, buoyed by a broad-market rally. The stock is surging above short-term resistance at $28, but the looming $30 level could act as a roadblock -- this round-number region marked the site of a bearish gap for HGSI back in late April.
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