Is Bluebird Bio set to rally this week?
Bluebird Bio has lost nearly half its market valuation in recent months, but at least one trader is looking for a rally by the end of this week.
optionMONSTER's Heat Seeker monitoring program shows that 2,125 January 60 calls were purchased for $1.20 at the same second on Friday. Volume was more than 5 times open interest at the strike, which indicates that new money was put to work.
Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Coaching section)
BLUE rose 2.48 percent to $55.44 on Friday but is down 43 percent in the last three months. The clinical-stage biotechnology company is expected to report earnings after the close on Feb. 24.
Overall option volume in Bluebird was 3 times greater than average on Friday. Calls outnumbered puts by a bullish 14-to-1 ratio.
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