Seattle Genetics has been ripping higher, and one investor is milking income from the trend.
optionMONSTER's tracking systems detected a surge of activity in the August 22.50 puts, which were sold for $0.80, and the July 20 puts, which were bought for $0.15. An even 1,700 traded in each, but volume was below open interest in the July contracts.
The investor apparently sold those at an earlier date to earn income and yesterday adjusted the trade to collect an additional $0.65. He or she also took on more risk by agreeing to stay in the trade for another month but raised by $2 the price at which he or she would be forced to buy shares.
SGEN rose 2.53 percent to $25.57 yesterday and is up 24 percent in the last month. Most of those gains have come after the company announced positive Phase 1 drug-trial data for its prospective cancer compound ASG-5ME.
Selling puts is a common strategy when investors like a stock but don't want to spend capital up front to buy shares. If their bullish outlook is correct and the stock does not fall, they can continue to collect income every month by rolling the contracts forward. (See our Education section for more strategies that turn time into money .)
Overall option volume was more than 7 times greater than average in the session.
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