U.S. Markets open in 2 hrs 14 mins

Bulls like Sequenom before earnings

David Russell (david.russell@optionmonster.com)

Sequenom report earnings tonight, and the bulls are stepping in ahead of time.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 1,000 April 4 calls for $0.78 and the sale of an equal number of April 4 puts for $0.40. Volume was more than twice open interest at each strike, clearly indicating that this is new positioning.

The trade cost $0.38 and will provide the investor with immediate leverage to a move higher, but the short puts will compel him or her to buy shares for $4 if they fall below that strike price. The trader might be willing to that anyway, because that level is the location of the 200-day moving average and an area where the stock bounced earlier this year. (See our Education section)

SQNM slipped 0.68 percent to $4.36 yesterday. It started bleeding lower in mid-2011 but has been finding support above its old highs more recently, which could be leading some chart watchers to believe that it's starting to turn around.

The maker of genetic-sequencing equipment faces a heavy short interest at about 32 percent of the float, which could squeeze the shares higher if sentiment begins to improve.

Total option volume in SQNM was 4 times greater than average yesterday.

More From optionMONSTER