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Genoptix play looks for large move

Chris McKhann (chris.mckhann@optionmonster.com)

Diagnostics services company Genoptix is seeing some of the lowest volatility of the last year, but one trader expects that to change.

GXDX trades at $19.48, up 0.52 percent on the day. Shares hit a 52-week low of $13.51 in late September and gapped higher in mid-December. That drove the 10-day historical volatility above 80 percent, but now that it is out of the calculation, that metric is down to 18 percent near the 52-week lows.

The implied volatility remains high, however, with the average up 48 percent. One trader is apparently willing to pay that price, as we see 3,000 of the February 17.50 puts bought for $0.60 on the ask in a very wide spread.

Seconds later, one block of 149,297 shares of GXDX were bought for $19.37. For reference, the next largest print was 800 when total volume was at 165,481.

GXDX

So this sets up as a delta-neutral trade that can profit if shares of GXDX move sharply higher or lower. Time decay around the $17.5 level is the real enemy here, and the trader is making a bet that the real volatility will pick up dramatically. (See our Education section)

(Chart courtesy of tradeMONSTER )